You know how it goes — something like this: I, (Bride/Groom), take you (Groom/Bride), to be my (wife/husband), to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.
How touching. How sweet. Maybe it even brings a tear to your eye. Of course, that tear may well be the result of your crying when one of those spouses steals from the other and you get caught in the middle of a nasty lawsuit or arbitration.
Consider this FINRA arbitration claim filed in October 2008, seeking $1 million in damages. Illa Mellul alleged that as a result of M Holdings Securities Inc.'s failure to have proper procedures in place, the company's registered representative was able to close Mellul's account based on documentation provided by her estranged husband without verification by M Holdings.
Mellul alleged that the rep, David Allan Marcus, sold off every position in her brokerage account without her direction, consent, or acquiescence. Worse, Mellul alleged that Marcus then transferred the proceeds to her estranged husband.
Marcus and M Holdings denied the allegations, and the matter was settled in June 2010 when Mellul voluntarily withdrew her claims following a stipulated award and settlement. That's all well and fine, but Marcus was left with a pretty nasty blot on his Central Registration Depository files. Accordingly, Marcus sought an order of expungement concerning the Mellul arbitration.
In considering his request, the FINRA arbitration panel noted that Mellul had acknowledged that Marcus did not commit any forgeries and did not personally liquidate her account. Further, the panel found that Marcus had confirmed all written account instructions by telephone with Mellul.
As a result, the panel recommended the expungement of Marcus's CRD files, subject to his obtaining confirmation of that expungement from a court of competent jurisdiction. (Illa Mellul, Claimant, versus M Holdings Securities, Inc. and David Allan Marcus, Respondents; FINRA Arbitration #08-03976, August 12, 2010).
You think that the Mellul case is an isolated situation? Think again.
In April 2009, investor Joyce Yabkow filed a FINRA arbitration claim against Citigroup Global Markets and William J. Burns seeking damages of $360,000.
Among other things, Yabkow claimed that her husband had defrauded her over the years when he forged her signature to effect transfers of money in her Citigroup account. Yabkow alleged negligence, failure to enact reasonable safeguards, failure to exercise due care, breach of fiduciary duty, unauthorized transfer of funds, and breach of contract. However, Yabkow did not allege that her former stockbroker, Burns, was aware of the forgeries.
Although Citigroup and Burns denied the allegations, in July 2010 the parties settled the matter on undisclosed terms. Not surprisingly, Burns sought an expungement of the Yabkow arbitration from his CRD records.
In addition to hearing testimony, the FINRA arbitration panel reviewed the settlement documents and considered the payment made by Citigroup and other terms and conditions of the settlement. Another important factor was that Yabkow did not object to the requested expungement.
Accordingly, the panel unanimously determined that Burns was not involved in the alleged investment-related sales practice violation, fraud, forgery, theft, misappropriation, or conversion of funds, nor was he negligent in the handling of Yabkow's account. The panel recommended the expungement of all reference to the arbitration from Burns' CRD records. (Joyce Yabkow, Claimant, vs. Citigroup Global Markets, Inc. and William J. Burns, Respondents; FINRA Arbitration 09-02318, September 30, 2010).