This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.
An All-Public Panel dismisses with prejudice a group of customers’ claims against Respondent broker-dealer and imposes monetary sanctions in the form of attorney fees pursuant to FINRA Rules 12212(c) and 12511 for their intentional disregard and failure to comply with the Panel’s Orders regarding the production of discovery in this matter.
Claims
In the Statement of Claim in Hayes v. Aegis Capital Corp., FINRA ID No. 22-02854 (Cleveland, OH, May 24, 2024), Claimants asserted the following causes of action:
“suitability, churning, failure to supervise, breach of fiduciary duty, breach of contract, unauthorized trading, negligence, misrepresentation, and omission of facts. The causes of action related to Original Claimants’ allegations that they are the victims of various FINRA violations and suffered loss of their savings. Unless specifically admitted in the Statement of Answer, Respondent denied the allegations made in the Statement of Claim and asserted various affirmative defenses.”
Discovery Orders Not Followed
After several arguments were exchanged over discovery, the Panel holds:
“No factual explanations have been provided by Claimants’ counsel either to Respondent throughout discovery or to the Panel since November 2023 regarding the remaining gaps in discoverable items sought, with no indication of intent for further submissions. No discussions have been held or are planned between the parties for resolving the open issues.
“The complete discovery record shows extended non-compliance regarding essential items, with repeated efforts by the Panel to guide the process to a satisfactory resolution proving unsuccessful. There is no evidence of prospects for a favorable change by Brandon Dei, who on his clients’ behalf ultimately bears the burden of proof for their alleged claims. The Panel thus grants the Motion to Dismiss with prejudice. Also ruling on the Respondent’s Motion to Enforce and for Sanctions prepared on September 27, 2023, a decision which had been deferred across multiple hearings to allow further opportunity for production that went unrealized, the documented expense of $4,132.00 covering attorneys’ fees to prepare the motion for sanctions is granted to Respondent against Claimants. No further damages or sanctions or any other form of relief are awarded, with each party responsible for all its own costs to this conclusion.”
Claims Dismissed
On the substantive claims:
“After considering the pleadings, the Motion to Dismiss and all responses thereto, and the arguments presented at the prehearing conference on April 9, 2024, the Panel has decided in full and final resolution of the issues submitted for determination as follows: 1. Claimants’ claims are dismissed in their entirety; 2. Claimants are jointly and severally liable for and shall pay to Respondent the sum of $4,132.00 in attorneys’ fees in connection with the Motion for Sanctions; and 3. Any and all claims for relief not specifically addressed herein, including any requests for punitive damages and treble damages, are denied.”
All but $562.50 of the $5,625 in hearing session fees were assessed jointly and severally against Claimants.
(ed: Lead summary provided courtesy of SAC’s ARBchek facility (www.arbchek.com).)
