Sigma Financial Corp., a large independent broker with close to 600 reps and advisers, is facing four arbitration claims seeking alleged damages of about $4.5 million, according to the firm's most recent audited financial statement, called a Focus Report, that it filed with the Securities and Exchange Commission.
It's not clear what the allegations are in the customer claims, or the nature of the claims. However, million-dollar legal claims by clients can prove onerous for independent broker-dealers like Sigma Financial that usually run on extremely tight margins.
Sigma Financial's CEO, Jerry Rydell, did not return calls on Thursday to comment.
According to the InvestmentNews' database of broker-dealers, Sigma Financial reported $124.3 million in total revenue in 2019, the most recent year available. The $4.5 million in potential damages is roughly 3% of that year's total sales.
Of course, damages cited in arbitration claims are only potential figures, and investors suing a firm for $1 million could receive an arbitration award of far less, or have the claim denied entirely and get nothing.
Sigma Financial has socked away almost $652,000 in preparation for the claims, according to the Focus Report, which the firm filed in March but only became available on the SEC website this month. Sigma "has recorded a loss contingency of $651,834 in accounts payable and other liabilities for potential losses, costs associated with the defense of these customer claims, and a pending settlement," according to the filing.
Two years ago, Sigma Planning Corp., the RIA arm of the Ann Arbor, Michigan-based broker-dealer, reached a settlement with the Securities and Exchange Commission in which the firm agreed to pay $2.5 million in fines and restitution to clients after it faced charges that it chose mutual funds for clients that provided the firm with financial benefits without disclosing its conflicts to clients.
A $141M judgment and a federal asset freeze collide over one shrinking pool
The firm's CFO and EVP of Wealth Management Solutions are the latest executives to exit the broker-dealer.
Clients are saying they would consider switching advisors if another professional offered estate planning services, according to a new Trust & Will survey.
CEO Laurel Taylor says the fintech's composable AI stack helps workers optimize dollars across Trump Accounts, 529s, 401(k)s, and other employee benefits.
The bank has swiped three private banking veterans from BNY as the city climbs the ranks of America's fastest-growing wealth hubs.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
