An irreverent Wall Street Blog
The Disappearing Act of Elder Abuse in a TD Ameritrade FINRA Arbitration
October 6, 2022
In today's blog, we have a lawsuit by two customers against TD Ameritrade. That much is certain. What's uncertain is whether one or both of the complaining customers are elderly. What's uncertain is what happened to the customers' allegation of elder abuse. What's uncertain is why FINRA accepted a filing from a member firm that a "party" had won an arbitration award rather than a clear-cut disclosure that the customers prevailed and the firm lost.
Case in Point
In a FINRA Arbitration Statement of Claim filed in November 2021, public customer Claimants Ricardo and Sandra De Los Santos (the "De Los Santoses") "alleged that Respondent liquidated their accounts without consent and without providing a reason for selling their stocks." Respondent TD Ameritrade denied the allegations and asserted affirmative defenses.
In the Matter of the Arbitration Between Ricardo De Los Santos and
Sandra De Los Santos, Claimants, v. TD Ameritrade, Inc., Respondent (FINRA Arbitration Award 21-02661)
https://www.finra.org/sites/default/files/aao_documents/21-02661.pdf
FINRA Award
The FINRA Arbitration Panel found Respondent TD Ameritrade liable and ordered the firm to pay to Claimants $95,793.25 in compensatory damages plus $400 in filing fees.
Bill Singer's Comment
ELDER ABUSE
FINRA's online BrokerCheck database discloses as of October 6, 2022, for TD Ameritrade, Inc. (Central Registration Depository "CRD" #7870) under "Disclosure 108 of 132" on Page #203 that on November 8, 2021, FINRA Arbitration 21-02661 was initiated seeking "Unspecified Damages" based upon these reported "Allegations" [Ed: highlighting added]
https://files.brokercheck.finra.org/firm/firm_7870.pdf:
https://files.brokercheck.finra.org/firm/firm_7870.pdf:
ACCOUNT ACTIVITY-ELDER ABUSE; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED - BREACH OF CONTRACT; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNT RELATED-EXCHANGES; ACCOUNT RELATED-OTHER; TRADING DISPUTES-MANIPULATION; TRADING DISPUTES-SELL OUTS
PARTY time
Note that the FINRA Arbitration 21-02661 cited above on BrokerCheck is the same docket number attached to De Los Santoses v. TD Ameritrade; and, further, Disclosure #108 of #132 notes that there was a "DISPOSITION" of an "AWARD AGAINST PARTY" on October 4, 2022, in the amount of $96,193.27 (which, if you do the math is the same as the Panel's Award of $95,793.25 plus $400). So . . . I'm pretty confident that we've matched the FINRA Arbitration Award to TD Ameritrade's BrokerCheck disclosure #108.
Disappearing Act
In the FINRA Arbitration Award, the two Public Arbitrators and one Non-Public Arbitrator asserted that the Claimants had alleged that Respondent TD Ameritrade had "liquidated their accounts without consent and without providing a reason for selling their stocks." In contrast . . . in sharp contrast . . . in stunning contrast . . . in troubling contrast, FINRA's BrokerCheck discloses that the De Los Santoses alleged, inter alia, "ACCOUNT ACTIVITY-ELDER ABUSE." How come there's no mention -- at all -- of "elder abuse" in the FINRA Arbitration Award? How did that charge -- made by the Claimants and reported by TD Ameritrade to FINRA via BrokerCheck -- disappear from the FINRA Arbitration Award?
The De Los Santoses may have been elderly -- or not. Oddly, there's no mention of their age or elder status in the FINRA Arbitration Award.
The De Los Santoses may have alleged in their FINRA Arbitration Statement of Claim or during their testimonies examples of elder abuse or elder fraud -- or not. Oddly, there's no mention of such charges or issues in the FINRA Arbitration Award.
It may be that the De Los Santoses alleged "elder abuse" but the three FINRA arbitrators found the claim meritless. If so, then given the seriousness of the charge, that explanation should have been set out in the FINRA Arbitration Award.
A Parting of the Ways
As I have often admonished, I detest this preamble that is arbitrarily inserted at the top of every FINRA Arbitration Award:
Awards are rendered by independent arbitrators who are chosen by the parties to issue final, binding decisions. FINRA makes available an arbitration forum-pursuant to rules approved by the SEC-but has no part in deciding the award.
Okay, so, fine -- let's all agree that FINRA had "no part in deciding the award." Let's agree that the three arbitrators wrote the FINRA Arbitration Award. What then are we to make of the fact that FINRA operates BrokerCheck, TD Ameritrade is a FINRA member firm, and TD Ameritrade reported the substantive aspects of the De Los Santoses' complaint (as FINRA rules required)? How are we to reconcile the "elderly" reference in TD Ameritrade's BrokerCheck Disclosure 108 with the absence of this disclosure in the FINRA Arbitration Award?
Also, I'm not quite sure if FINRA is asleep at the BrokerCheck switch because it sure as hell doesn't seem appropriate that when a purportedly independent panel of three arbitrators found TD Ameritrade liable to two public customers, that FINRA would allow its member firm to assert that the "DISPOSITION" of the case was that it had resolved with an "AWARD AGAINST PARTY." Party? The complaining customers and the respondent FINRA member firm are all parties. Which party won the award -- the customers or the FINRA member firm?
I don't like that AWARD AGAINST PARTY explanation at all; and FINRA sure as hell shouldn't have accepted it. It's a vague description that is open for interpretation. One could easily infer that TD Ameritrade prevailed against the other party (namely the customers) and was given an award on some counterclaim or in the form of costs/fees/expenses. Frankly, the only acceptable disclosure on BrokerCheck should be something along the lines of "AWARD AGAINST FIRM" or "AWARD IN FAVOR OF CUSTOMERS" -- and not the vague, weaselly language that FINRA accepted from its member firm and subsequently posted.
Making matters worse, TD Ameritrade seems to have entered this same generic DISPOSITION explanation in the bulk of its BrokerCheck arbitration disclosures! Yes, you could leave BrokerCheck and go onto FINRA's "Arbitration Awards Online" site and look up any FINRA arbitration. In fact, you could look up De Los Santoses v. TD Ameritrade and figure out that the customers prevailed. That's not my point. The issue that I'm raising is that once you're on FINRA's BrokerCheck site, you shouldn't have to go somewhere else to get the truth. There is no reason that FINRA-the-regulator should allow a member firm to routinely provide a disclosure that is so generic as to disclose nothing.