Raymond James in court over $1.7M arbitration settlement over suitability

Two months after Raymond James Financial Services Inc. was ordered to pay $1.7 million to an elderly Texas man, the broker-dealer and the client are arguing over the payment in court.
Plaintiff’s attorney Tracy Pride Stoneman this week filed a response in the 298th Judicial District Court in Dallas, rebuking the broker-dealer for appealing the award. Firms rarely appeal arbitration decisions.
“Having imposed binding arbitration in all of its agreements, [Raymond James] wants to avoid the ‘binding’ part once it faces a large, adverse award,” Ms. Stoneman wrote in her July 25 response.
The dispute surrounds a May arbitration award to Hurshel Tyler and the estate of his deceased wife, Mildred. The couple, in their late 80s when the case initially went to arbitration, had some $3.5 million in bond funds and was allegedly encouraged by an ex-Raymond James broker, then based in Amarillo, Texas, to put their money into a handful of variable annuities and variable life insurance policies. The plaintiffs contend that the investments were unsuitable.
In May, a Finra arbitration panel awarded the Tylers $1.13 million in compensatory damages, plus 5% interest, attorney’s fees and IRS penalties. The total came out to about $1.7 million.
Last month, Raymond James appealed the decision in the Dallas court, claiming that the clients should have returned the annuities, which had grown by more than $958,000. Initially, the Tylers had sought return of their money but were instead awarded compensatory damages and were not told to return the annuities.
The firm also argued that the $250,000 it was supposed to pay the Tylers in attorneys’ fees ought to be vacated because laws in Florida — where Raymond James is based — don’t allow for such awards.
Pushing back, Ms. Stoneman has asserted the arbitrators have the power to force a defendant to return the investor’s money without requiring a return of the investments and that Finra rules state that the arbitration panel has no obligation to share its rationale behind the award with the parties.
She also claimed that Raymond James failed to bring up its Florida law argument during the arbitration hearing and that the broker-dealer had demanded in the arbitration that its attorneys’ fees be covered.
“If Florida law does not allow an award of attorneys’ fees, then how is it that [Raymond James] can seek them?” Ms. Stoneman asked in her response.
Raymond James spokeswoman Anthea Penrose said the firm had no comment on Ms. Stoneman’s filed response to the appeal.
A court hearing on the firm’s challenge of the award is scheduled for Sept. 16.

Related Topics: Raymond James & Associates Inc.