A client arbitration complaint in which a broker’s living trust sought $20 million in damages will be removed from another financial advisor’s record after a panel granted the expungement.
The Amended and Restated Julian I. Stoopler Living Trust had settled the case against Merrill Lynch for $595,000 a couple of months before the Jan. 11
Filed in July 2020 as airline equity values
“It had a high margin balance,” the three panelists wrote in a brief explanation of the decision. Davidson “received no compensation from the margin account” and “suggested a hedging strategy and other recommendations,” including selling the American Airlines stock, the panel stated. However, Stoopler, “an experienced financial advisor, refused all recommendations.”
On that basis after reviewing the complaint, Merrill Lynch’s response to the allegations requesting the expungement, the settlement of the case and records from the wirehouse on letters to Stoopler and conversations with him and his son, the panel unanimously ruled that the claim is “false” and “factually impossible or clearly erroneous.”
The law office that represented Stoopler declined to comment, and efforts to reach him directly were unsuccessful. Reached by phone at the Garden City, New York-based office of the Davidson Wealth Management Group, Davidson declined to comment. Representatives for Merrill Lynch didn’t respond to requests for comment on the case.
Since the arbitration award contains no other details on the case, it’s “impossible to tell” from the document what ultimately convinced the panel to grant the expungement, Louis Straney of Arbitration Insight wrote in an email. In settlements, firms avoid the risk of a panel decision against it and clients steer clear of lower or nonexistent awards, Straney noted. Any background information about the claimant or the broker they worked with could play a role as well.
“Expungement may have been granted simply because, unknown to the broker, the strategy was somehow flawed and there was no proof of broker misconduct,” Straney said. “Unlike a lot of experts and claimant attorneys, I am not opposed to well-argued expungement. Just because it was a large claim that was settled doesn't mean that the expungement was not justified.”
Merrill Lynch and Stoopler’s trust informed FINRA that they reached a settlement on Oct. 21, meaning that the panel didn’t make any rulings directly on his request for damages and other costs in the complaint, according to the award document. Neither Stoopler nor his attorney attended an expungement hearing the panel held via telephone on Jan. 7, the document shows. The settlement didn’t prevent the trust from opposing the request for expungement, though.
Stoopler gained familiarity with the arbitration process throughout his career. He first entered the industry in 1969 with Mack, Bushnell & Edelman, according to Stoopler’s
Davidson has only one other case on
“The financial advisor denies the allegations of wrongdoing,” the note states. “The firm settled this matter to avoid the cost of litigation and the financial advisor did not contribute monetarily towards the settlement.”
