Lucy Chua and John Byrnes didn’t just lose their Finra arbitration claim against several financial firms and advisors for allegedly fraudulent sales of private corporate bonds — they’re on the hook for more than $2 million in attorneys’ fees and costs incurred by the winning side.
Chua and Byrnes are trustees of both the Yife Tien Irrevocable Dynasty Trust and Rocky Vista University, which purchased the bonds. Chua and Byrnes filed an arbitration claim in June 2018 alleging that the firms and brokers misrepresented and concealed “numerous existing ongoing non-public financial and operating problems of the bond’s issuer,” according to a Thursday arbitration award. The transaction involved taxable revenue bonds offered through a private placement.
Chua and Byrnes sought $5 million in compensatory damages and punitive damages of $15 million.
Not only did a panel of three Financial Industry Regulatory Authority Inc. arbitrators deny the claims, they also ordered the investors to pay the firms — INTL FCStone Financial Inc., Stifel Nicolaus & Co. Inc. and RBC Capital Markets — and the brokers — Jandra Stephen Lubovich, Jon Cary Cooper and Aaron Chaim Lupuloff — $1.8 million in attorneys’ fees and $294,024 in costs.
The claimants cited fraud, breach of fiduciary duty, failure to supervise, conversion and civil theft, among other causes of action. The arbitrators cited the Florida Civil Theft Statute in ruling that the respondents were entitled to recover their attorneys’ fees and costs. The case was adjudicated in Miami.
The outcome shocked a longtime Finra arbitration lawyer who was not involved in the case.
“That’s the largest attorney fee against a claimant I’ve ever seen in my 23 years [arguing Finra arbitration cases],” said Andrew Stoltmann, a Chicago securities attorney. “That is about as cataclysmic an outcome as a claimant can have in a Finra arbitration.”
Lawyers on each side of the case did not respond to requests for comment.
The arbitrators also granted expungement requests from Lubovich, Cooper and Lupuloff, and, in another unusual aspect of the award, provided detailed explanations for the expungements.
Lubovich is currently registered at a Stifel office in Minneapolis, according to his BrokerCheck profile. BrokerCheck shows that Cooper and Lupuloff are no longer registered as brokers. All three worked at Sterne Agee when the bond sales occurred in 2014.
Prehearing sessions in the case began in July 2019. The final hearing occurred two months ago.
Chasing productivity is one thing, but when you're cutting corners, missing details, and making mistakes, it's time to take a step back.
It is not clear how many employees will be affected, but none of the private partnership’s 20,000 financial advisors will see their jobs at risk.
The historic summer sitting saw a roughly two-thirds pass rate, with most CFP hopefuls falling in the under-40 age group.
"The greed and deception of this Ponzi scheme has resulted in the same way they have throughout history," said Daniel Brubaker, U.S. Postal Inspection Service inspector in charge.
Elsewhere, an advisor formerly with a Commonwealth affiliate firm is launching her own independent practice with an Osaic OSJ.
Stan Gregor, Chairman & CEO of Summit Financial Holdings, explores how RIAs can meet growing demand for family office-style services among mass affluent clients through tax-first planning, technology, and collaboration—positioning firms for long-term success
Chris Vizzi, Co-Founder & Partner of South Coast Investment Advisors, LLC, shares how 2025 estate tax changes—$13.99M per person—offer more than tax savings. Learn how to pass on purpose, values, and vision to unite generations and give wealth lasting meaning
