Selling Away Claims Denied in Arbitration

Firm Still Must Pay $32,000 In Forum and Related Fees

ROBINSON v. FIRST ALLIED SECURITIES, INC., NASD ID #99-04441 (Pittsburgh, 9/25/01):

This “selling away” case involved thirteen separately filed arbitrations that were consolidated for pre-hearing and hearing purposes. By the time of the hearing, the broker had declared bankruptcy, leaving FAS as the sole Respondent.

FAS argued, among other things, that the security purchased by the complaining investors was not sold by FAS, that some of the purchases were made when the broker was not employed by FAS, and that certain Claimants “were completely unknown to Respondent.”

The claim total exceeded $650,000, but, despite the complicated nature of the case and the high stakes, only nine hearing sessions were needed (five pre-hearing sessions were also held). The claims were denied in their entirety and without explanation.

However, the Panel assessed the forum fees of $14,550 against the Respondent. In addition, FAS had to pay approximately $16,000 in other fees. The member surcharges were particularly high because they were assessed as to each individual arbitration. Following consolidation, the pre-hearing and hearing process fees were “only assessed on the master case, based on the aggregate amount in the consolidated action.”

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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

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