Grandchildren Should Have Bought Decoder Ring to Decipher FINRA Arbitration Award

July 17, 2023

In today's befuddling FINRA Arbitration Award, we got a grandmother who set up a Trust; and, as a result of some unexplained action by Respondents, or maybe not as a result of anything Respondents did or didn't do, or maybe as a result of something the grandmother did or didn't do, or maybe because of something involving a neighbor of the grandmother, it appears that the grandmother's Trust bequests to her grandchildren were or were not honored. We got lots of clues and hints but just can't crack FINRA's indecipherable code.

Case in Point

In a FINRA Arbitration Statement of Claim filed in September 2022, Claimants asserted intentional interference with the right to an inheritance; breach of fiduciary duty; negligence; and breach of contract. Respondents generally denied the allegations and asserted affirmative defenses. In the Matter of the Arbitration Between Carole Appleton, Danielle (Appleton) Caponigro, Deborah (Appleton) Gallant, Timothy Appleton, Allen Markland, Robert Markland, and John Markland, Claimants, v. Stifel, Nicolaus & Co., Inc. and Gerard John Kelly, Respondents (FINRA Arbitration Award 22-02049)
https://www.finra.org/sites/default/files/aao_documents: 22-02049.pdf

As set forth in the FINRA Arbitration Award:

The causes of action relate to Respondents’ alleged negligence in allowing the transfer of shares from Claimants’ grandmother’s trust account to her neighbor’s account.

Motion to Dismiss

In December 2022, Respondents filed a Motion to Dismiss pursuant to FINRA Code of Arbitration Procedure for Customer Disputes Rule 12206: Time Limits, which Claimants opposed.

SIDE BAR: In pertinent part, FINRA Rule 12206 states:

(a) Time Limitation on Submission of Claims
No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim. The panel will resolve any questions regarding the eligibility of a claim under this rule.

(b) Dismissal under Rule
Dismissal of a claim under this rule does not prohibit a party from pursuing the claim in court. By filing a motion to dismiss a claim under this rule, the moving party agrees that if the panel dismisses a claim under this rule, the non-moving party may withdraw any remaining related claims without prejudice and may pursue all of the claims in court. . . .

A Matter of Awareness

The FINRA Arbitration Award explains in pertinent part that:

The issue surrounds the 2013 Trust Amendment of Claimants’ grandmother. Claimants claim that Respondents interfered with an inheritance Claimants would have received under an earlier 2007 Trust.

Based on the timeline, the present claim in September 2022 is more than six years after the amendment to the Trust; and is more than 6 years since Claimants filed a "Motion to Change the Revocable Trust (2015)”, which means Claimants were aware of the 2013 amendment more than six years before the filing of the claim. The Panel finds that this case must be dismissed pursuant to Rule 12206.

The FINRA Arbitration Panel granted Respondents' Motion to Dismiss without prejudice to any right they may have to file in court.

Bill Singer's Comment

Claimants alleged that the grandmother's 2007 Trust provided for certain bequests -- beyond that, well, it's sort of tough to figure out from the FINRA Arbitration Award just what the hell happened. There's a reference to a 2013 Trust Amendment. There's a reference to a 2015 Motion to Change the Revocable Trust. Beyond the mere references, however, the Award provides no background or explanations other than that the Claimants had alleged that the Respondents negligently allowed "the transfer of shares from Claimants’ grandmother’s trust account to her neighbor’s account." The only explanation in the Award is that Claimants filed their FINRA Arbitration Statement of Claim beyond the six-year-eligibility period set out in FINRA Rule 12206.

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