Customer Sues Over Tax Penalties on IRA Withdrawal and failed 72(t) Account

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Oct 13, 2010 8:16 am

Don't Ask. Don't Tell. A Taxing Case

http://www.brokeandbroker.com/index.php?a=blog&id=584

Public Customer Lyn Ashlock alleged that she withdrew money from her IRA to meet her expenses but that her broker, Amy Cady, had failed to warn her regarding the adverse tax penalties from such a transaction. Claimant Ashlock sought $25,850 in compensatory damages and $20,000 in punitive damages, plus attorneys’ fees, costs, etc.. Accordingly, Claimant Ashlock asserted breaches of fiduciary duty/contract; failure to give tax advice; negligence in not initially establish a 72(t) account; and failure to supervise.

Respondents generally denied the allegations and asserted various affirmative defenses, including that all contracts/documents signed by Claimant Ashlock included specific disclaimers that Respondents:

were not in the business of giving tax advice, did not give tax advice; and urged all clients to seek independent tax counsel.

Respondent Amy Cady requested expungement of the arbitration from her Central Registration Depository ("CRD") record on the grounds that the claims/allegations are false, or, in the alternative, are factually impossible/clearly erroneous.

So, how do you think this FINRA arbitration turned out? 
Read the full story at:

http://www.brokeandbroker.com/index.php?a=blog&id=584

Oct 13, 2010 9:33 am

Very interesting case... Thanks for breaking it down Bill.