An Arbitration panel shot down a claimant's request for up to $2.9 million for allegedly botched investments tied to private placements and Ponzi schemes last week, and instead ordered her to pay almost $136,000 in costs and expert witness fees.
The decision from the Financial Industry Regulatory Authority arbitration panel followed a two-year case that began when California resident Jaimie Davis first filed her February 2010 claim against FINRA member firm WFP Securities Corp., registered representative Curtis Jerome Sathre III and WFP President John Evan Schooler. Davis’s statement of claim cites $350,000 in losses tied to fraudulent investments that are suspected Ponzi schemes. (Including Medical Capital Corp. and Striker Petroleum LLC) In addition, more than $1 million was invested in “speculative, illiquid real estate and oil and gas interests” without proper disclosure of their risks and lack of liquidity, according to the claim. The claim cites $1.86 million that Davis may lose due to risky, illiquid investments in other private placements. In her claim, Davis asserted breach of fiduciary duty, breach of contract, negligence, failure to supervise and control person liability and violation of California Corporations Code.
In a decision dated March 1, the FINRA arbitration panel ruled in favor of the respondents. The FINRA dispute resolution documents said that the panel determined that Davis failed to prove the causes of actions or allegations in her original claim. Those documents also note that Davis also has filed arbitration claims with the American Arbitration Association; JAMS Arbitration, Mediation and ADR Services; and also has a court case against some of the investments sponsors. Some of those cases have settled and some are ongoing, according to FINRA’s dispute resolution document.
“The panel found it highly likely that Claimant sought double recovery from the claims Claimant filed in this arbitration and in other forums,” FINRA’s document said. “Claimant’s actions protracted the FINRA Dispute Resolution arbitration proceedings and enhanced the costs and fees of Respondents. Claimaint’s actions are in direct violation of FINRA Code Rule 12209.” With that, the FINRA panel dismissed Davis’ claims and ordered her to pay $135,755.89 plus 10% annual interest, from the date of the award until it is paid, for the respondents’ costs and expert fees. In addition, the FINRA panel also recommends the expungement of references to the arbitration from both Sathre’s and Schooler’s records.