National Planning Corp., a leading independent broker-dealer, was ordered to pay a $6.2 million arbitration award to two Minnesota investors in a dispute that focused on real estate investments.
The investors in the matter, Ronnie and Stacy Erickson and various trusts on their behalf, alleged that NPC and a former broker, Christopher R. Olson, breached their fiduciary duty, were negligent, made misrepresentations and violated other industry rules, according to the award, which was issued Nov. 18 by a three-person Financial Industry Regulatory Authority Inc. dispute resolution panel.
The Ericksons filed the complaint, which involved real estate investment trusts and other private real estate investments, in February 2012 and sought $12.5 million in compensatory damages.
Mr. Olson filed for bankruptcy this May, and in accordance with such a bankruptcy filing, all claims are halted, according to the award.
The award, large by Finra arbitration standards, was a split decision. The two public arbitrators consented, while the nonpublic or securities industry arbitrator didn't agree with the award.
NPC is part of the National Planning Holdings Inc., a network of four broker-dealers affiliated with Jackson National Life Insurance Co.
A spokeswoman for NPC, Melissa Hernandez, declined to comment on the award.
An attorney for the Ericksons, Bryan Keane, didn't return a call seeking comment on Tuesday.
The award doesn't list the specific REITs in which the Ericksons were invested.
It does state that the other real estate investments were in a company called Waterway Holdings Group, which was owned by Mr. Olson and another employee of Preferred Resource Group Inc., a network in the Minneapolis area of financial consultants, certified public accountants and attorneys.
Preferred Resource Group was named in the complaint but wasn't liable for the award, according to the Finra filing.
A message for Mr. Olson at his Preferred Resource Group office on Tuesday wasn't returned.
The Ericksons “asserted that they also had to satisfy outstanding loan amounts on mortgages on the real estate investments in order to prevent foreclosure,” according to the Finra award.
The couple “further alleged that Olson manipulated them into undertaking significant debt, paying millions of dollars in cash that cannot be recovered, and liquidating, annuitizing and structuring their investment assets earmarked for retirement to pay the staggering debt obligations related to the real estate investment recommendations," according to the award.
Mr. Olson was permitted to resign from NPC in March for “failure to disclose outside business activities and failure to disclose client involvement in said activities,” according to his report on BrokerCheck.
In April, he became registered with Berthel Fisher & Co. Financial Services Inc., according to BrokerCheck.
Dow Jones first reported the $6.2 million award.