An irreverent Wall Street Blog
Nietzsche, BeeGees, Kierkegaard, Syndergaard, and Jive Talkin' On Wall Street
August 24, 2018
Happy-go-lucky Friedrich Nietzsche ("Freddy" to his pals) observed: "To live is to suffer, to survive is to find some meaning in the suffering." And the guy wondered why he didn't get invited out to more parties? In any event, clearly moved by Freddy's point about suffering and finding its meaning, songwriters Barry, Maurice, and Robin Gibbs penned these immortal lines:
Now, mind you, the BeeGees' words have a back beat you can dance to whereas Nietzsche had that one song with Freddy and the Dreamers, which, if memory serves me, was something like "I'm Telling You Now." Okay, sure, there was also "Do the Freddy," but, c'mon, we're not really going to count that one, are we? Of course, if we're being honest here, from what I heard, the Dreamers parted ways with Nietzsche because he was such a downer and kept repeating himself to the point where the other guys in the band said, Freddy, enough already, we heard you, we know you're telling us, telling us "now" as you keep repeating, but, like, give it a rest already. He wouldn't. The Dreamers were exasperated. And thus Existentialism was launched from the ashes of an aborted rock 'n roll career. Not the stuff you read in the history books but that's what makes the BrokerAndBroker.com Blog so special. In a future installment, we will examine the rumor that New York Mets pitcher Noah Syndergaard is Soren Kierkegaard but with a better breaking ball and more control of the location of his pitches. It has been reported on the world wide web and information superhighway that Kierkegaard was so depressed after being turned down as Nietzsche's replacement in the Dreamers that he dabbled with drugs and the dark arts, inadvertently came upon a formula for eternal life, and since his birth in 1813, has lived on with his present incarnation as a starter in the Mets pitching rotation. I'm not saying that I buy into that whole story but, you know, truth is not always truth.It's just your jive talkin'You're telling me lies, yeahJive talkin'You wear a disguiseJive talkin'So misunderstood, yeahJive talkin'You really no good
All of which brings us to the point of today's BrokeAndBroker.com Blog, which, as you may have guessed, is about jive talkin' on Wall Street and the suffering it causes but, how, in dealing with that suffering, some investors find meaning, even if only in the form of compensatory damages, and, therein, imbue their suffering with meaning, albeit 2/3rds meaning after they deduct their lawyer's 1/3 contingency fee.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2018, and as amended thereafter, public customers Claimant Fluharty representing herself pro se asserted that an Edward Jones financial advisor improperly advised her to sell her Merrill Lynch Investor Choice Annuity, which resulted in damages including a penalty for the sale and increased taxes.Ultimately, Claimant Fluharty sought $23,094.90 in compensatory damages as a result of additional taxes paid, $200.00 as reimbursement for an accountant fee, $600.00 filing fee reimbursement, $500.00 mediation cost reimbursement, and $1,520.10 in interest, In the Matter of the FINRA Arbitration Between Kelly Fluharty, Claimant, vs. Edward Jones , Respondent (FINRA Arbitration 18-00725 , August 13, 2018) http://www.finra.org/sites/default/files/aao_documents/18-00725.pdf
Respondent Edward Jones generally denied the allegations and asserted various affirmative defenses.
The sole FINRA Arbitration found Respondent Edward Jones liable and ordered it to pay to Claimant Fluharty
- $22,999.90 in compensatory damages plus interest until paid in full
- 200.00 in costs; and
- $600.00 reimbursement for the filing fee
Bill Singer's Comment
According to the customer's allegations and the arbitrator's decision, we have a situation wherein an unnamed financial advisor apparently advised the customer to sell her "Merrill Lynch Investor Choice Annuity." Why did that specific conversation occur? We don't know because the FINRA Arbitration Decision doesn't provide that background. I would have been interested to learn whether Claimant Fluharty had decided to close a Merrill Lynch account, which held her annuity, or whether she needed to raise cash, or whether the Edward Jones advisor recommended the liquidation of the annuity in order to generate proceeds to purchase some house product or other investment. Whatever prompted the Edward Jones advisor's recommendation to sell the annuity, it would appear that the advice did not include a warning that the ensuing sale would trigger a taxable event.
Before you are too harsh to judge anyone in this matter, and before you form an opinion about what folks should have known, let me provide you with a fun exercise. I entered "Merrill Lynch Investor Choice Annuity" into Google, and got some results that include this link:
https://www.transamerica.com/images/merrill_lynch_investor_choice_ira_series_tcm73-23169.pdf?dt=1534859100683
https://www.transamerica.com/images/merrill_lynch_investor_choice_ira_series_tcm73-23169.pdf?dt=1534859100683
I'm not saying that the above link will take you to the actual product Claimant Fluharty bought, but here's the document that you will find loading on your screen:
To be very clear, I have no idea whether Claimant Fluharty purchased an "IRA Series" annuity via a 2017 prospectus. I have no idea whether she purchased a Flexible Premium Variable Annuity or if Transamerica Advisors Life Insurance Company had anything whatsoever to do with Claimant's annuity. As you can see, I don't know lots of crap. The FINRA Arbitration Decision doesn't flesh out the specifics of the annuity at issue beyond its purported name.MERRILL LYNCH INVESTOR CHOICE ANNUITY IRA SERIESPROSPECTUS MAY 2017A FLEXIBLE PREMIUM VARIABLE ANNUITYTRANSAMERICA ADVISORS LIFE INSURANCE COMPANY CONTRACT PROSPECTUS
As such, going forward with our exercise, here's what we're gonna do. Let's pretend that I'm either selling you whatever it is that is linked to on the transamerica.com page above -- or I'm trying to persuade you to dump whatever the hell it is that you own. Howasabout you take a look at the linked prospectus and see what guidance, if any, it gives you about how the mechanics of liquidating your holding. The good news for you is that there's a ton of information in the hyperlinked prospectus about the annuity. The bad news is that there is literally 367 pages of information -- a digital ton, as it were. If you read one page a day, it should only take you about one year and two days to read it all. If you are a fast reader and can digest, say, ten pages a day, why you should be able to fly through the online prospectus in only about five or so weeks.
All of which brings me to a fundamental question: Why would anyone buy anything that requires 367 pages of explanation? Which also prompts the question: How can anyone intelligently sell anything requiring 367 pages of explanation? Which then prompts me to wonder whether anyone who sells this stuff really, really, really reads each and every prospectus for each and every product that they recommend. And if you are that charming, dashing, and intelligent person that you seem to be, why would you rely the advice from anyone on Wall Street when it comes to making investment decisions? They don't actually tell you that it's jive talkin' when it comes to Wall Street, do they?