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Too Many Questions In Edward Jones TOD Account FINRA Arbitration
October 24, 2017In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in November 2016, Claimant Koontz asserted one cause of action: "misrepresentations." Yeah, just one word of complaint. What caught my attention about today's featured FINRA arbitration, however, was its caption. Just consider this array:
In the Matter of the FINRA Arbitration Between:Charles Koontz, Claimant v. Edward Jones and David Karl Holman, Respondents v. Don A. Coldsmith, Nelson L. Hoachlander, Randall L. Koontz, and, Bernice Schick, Third-Party Respondents-AND-Don Goldsmith, Counter-Claimant v. Charles Koontz, Counterclaim Respondent-AND-Don Coldsmith, Cross-Claimant v. Edward Jones and David Karl Holman, Crossclaim Respondent(FINRA Arbitration 16-03301, October 20, 2017).
Cast of Thousands For One-Word Claim
As set forth in the FINRA Arbitration Decision, Claimant Koontz sought the following relief:
In the Statement of Claim, Claimant requested unspecified compensatory damages, attorneys' fees, costs, and specific performance: enforcement of TOD.In the Supplemental Statement of Claim, Claimant requested attorneys' fees costs and other monetary relief as follows: (a) $985.00 paid to Bell Insurance for the bond required by the Franklin County Court; (b) $4,575.00 due to missing the Pennsylvania inheritance tax discount payment, due to the delay caused in processing the disputed TOD designations; (c) $18,150.00 (annualized), due to lost interest/returns on the frozen Edward Jones account. This assumes an annual rate of return of 3% on the frozen account; (d) $190.00 in filing fees to the Franklin County Court; and (e) legal fees of $4,800 related to matters directly related to the instant dispute (including the filing of special court petitions and a court hearing).
Passing the Blame
Respondents/Crossclaim Respondents Edward Jones and Holman; Third Party Respondent Coldsmith; Counterclaim Respondent Koontz; and Crossclaim Respondents generally denied the allegations and asserted various affirmative defenses.
Edward Jones and Holman requested that no damages be awarded to Claimant Koontz. Jones/Holman also sought the expungement of this matter from the Central Registration Depository records ("CRD") of Holman. Finally, Jones/Holman sought an order from the Panel authorizing the firm to disburse the account's assets.
Koontz requested that Jones/Holman's counterclaims be dismissed and that "Mr. Leight's account be processed according to the most recent TOD designations prior to Mr. Leight's death."
Coldsmith requested that the FINRA Arbitration Panel disburse the account's funds in accordance with the beneficiary designations of "decedent John R. Leight." Coldsmith asks that no damages be awarded to Jones/Holman and that his costs, expenses, and fees be assessed against Koontz.
Respondents Schick and Hoachlander did not appear at the evidentiary hearing.
Holman Dismissed
Upon the conclusion of Claimant Koontz's case-in-chief, Respondent Holman moved to dismiss, which was opposed by Claimant. The FINRA Arbitration Panel granted the motion based upon a finding of insufficient evidence. The FINRA Arbitration Decision asserts that Holman had withdrawn his CRD expungement request "because the occurrence is not reportable."
Awards
The FINRA Arbitration Panel dismissed with prejudice Claimant Koontz's claim against Respondent Holman.
Also, the Panel denied Coldsmith's Counterclaim.
Finally, the Panel made the following awards:
Bill Singer's Comment2. Respondent Edward Jones is ordered to pay to Charles Koontz the sum of $21,319.19 from the John Robert Leight Account.3. Respondent Edward Jones is ordered to pay to Randall L. Koontz the sum of $6,158.50 from the John Robert Leight Account.4. Respondent Edward Jones is ordered to pay to Don A. Coldsmith the sum of $6,158.50 from the John Robert Leight Account.5. Respondents Edward Jones is ordered to distribute the principle funds of the John Robert Leight account, less the amounts stated in paragraphs 1, 2 and 3 above, in equal shares to Don A. Coldsmith, Charles E. Koontz, Randy L. Koontz, Bernice Schick and Nelson L. Hoachlander based on the TOD dated December 17, 2010.6. Respondent Edward Jones is liable for and shall pay to Claimant Charles Koontz the sum of $375.00 to reimburse Claimant for the non-refundable filing fee previously paid to FINRA Dispute Resolution. . .
I'm a bit surprised that the FINRA Arbitration Decision omits an explanation for the acronym "TOD," which stands for "Transfer on Death." A TOD account provides a way of designating beneficiaries who will receive a deceased account-holder's assets outside of probate. Brokerage firms typically require the presentation of an original, certified death certificate plus documentation to establish proof of given beneficiary's bona fides.
As best I can infer, Claimant Koontz sought to have the FINRA Arbitration Panel order the disbursement of assets in the "John Robert Leight" TOD account. Claimant appears to be seeking reimbursement for court- and tax-related costs attendant to the apparent failure by Edward Jones to timely disburse the TOD assets. Given those inferences, I find it truly baffling that there is not so much as a bare-bones explanation of how the Leight TOD Account was structured or what prompted the alleged failure by Edward Jones to timely disburse the decedent's assets in accordance to the terms of his account. Similarly, there is no explanation as to whether there were competing claims by other named or unnamed beneficiaries or if there were any challenges by the Estate or others.
To underscore how absurd the lack of content and context in this Decision is, let me ask one very basic question. Okay --- you ready? Just who the hell is Claimant Koontz? Is he a TOD beneficiary? Is he a trustee? Is he an estate administrator? Is he an executor? Is he a family member? You'd sort of think that the FINRA Arbitration Decision would at least indicate the capacity in which this Claimant was suing in order to obtain the disbursement of the Leight TOD Account.
SIDE BAR: Curiosity having gotten the better of me, I did some research and came upon a May 16, 2016, obituary notice for a "John Robert Leight" that indicates that individual was "preceded in death by his wife, Madalene (Koontz) Leight . . ." As such, Claimant Koontz may be related to John Robert Leight's pre-deceased wife.
In the above quoted paragraphs #2 -4, did the Panel order the payment of "compensatory damages" to the three individuals -- and, if not, just how are we to describe the three ordered payments? What do those payments represent and how are they legally made from a TOD account if they are not so provided by its terms? If the ordered payments are "damages" or some form of restitution, on what legal basis are they taken out of the TOD account and not from the pocket of Edward Jones? If the payments are not damages or restitution, then just what are they? To be clear, I am NOT asserting that the arbitrators awarded damages or restitution or that Edward Jones did anything wrong. To the contrary, I am pointing out that the lack of content and context in this FINRA Arbitration Decision prompts far too many inferences and unanswered questions.
I'm guessing that where the Decision states "Respondents Edward Jones is ordered to distribute the principle funds . . ." that the arbitrators meant "principal" but given the lack of clarity in this matter, I'm not sure what to make of that word.
Finally, for those of you who think that I am over-stating the lack of content and context in this Decision, please read: the full-text, online document at http://www.finra.org/sites/default/files/aao_documents/16-03301%20Award.pdf