PIABA’s New President Is A Nice Guy, Sure, But He’s Hardly Your Friend

From Ulmer’s Broker-Dealer Law Corner Blog
By Alan M. Wolper

I have stated more than once in these posts that among claimants’ counsel, I have perhaps the greatest respect for Andrew Stoltmann, a fellow Chicagoan. I am not saying that I ever agree with anything he has to say, because I don’t, but he is a gentleman, he acts ethically, he is fun to listen to, and his zealous approach to the representation of this clients is legitimate, not feigned, as it is with too many claimants’ lawyers.

But you should know, if you aren’t already aware, that Andrew was just voted in as PIABA’s president, and he is taking no prisoners.

Here is the acceptance speech Andrew made to his fellow PIABA members last week. If you do nothing else, skip to the 9:18 mark, just to hear him announce, rather remarkably, his “declaration of war on the securities industry.” If there is anyone out there who thinks customer arbitrations are fun and games, think again. PIABA is out for blood. In its world, there is no middle ground: if you are a BD, or work for a BD, you are the enemy, and it will work to take you down. As they say, to be forewarned is to be forearmed, so take this “declaration” seriously.

Just so you don’t have to listen to the rest of Andrew’s speech – but you should, since if you’ve never heard him pontificate, here is a wonderful opportunity to do so – here are the issues that he identified for PIABA this coming year under his reign:

  • Unpaid arbitration awards: PIABA believes that it is a national crisis that, according to its statistics, 25% of arbitration awards go unpaid. I have written about this before, so I won’t repeat myself, but, in short, I fear this issue is more about PIABA members getting paid than anything else.
  • Adding less educated people to arbitration panels: PIABA apparently believes that FINRA’s standards for allowing people to serve as arbitrators are too strict, and should be relaxed so, say, someone with only a high school education can serve. Well, this is hardly surprising. Remember, PIABA was the group that was responsible for FINRA’s decision to make the industry member of the hearing panel an option, rather than a requirement. For PIABA, the less informed a panelist is about the securities industry and how it works, the less likely the facts will matter to him or her, and the more likely they will be swayed by sympathy and empathy, tools that PIABA lawyers often wield with great skill.
  • Fighting to keep the Fiduciary Rule alive: PIABA is concerned that under the current administration, the Fiduciary Rule will never be implemented, and it wants to prevent that from happening. Again, it is easy to see why, since it is way, way easier to articulate a vague claim for a breach of a fiduciary duty than it is to prove that a particular rule or regulation has been violated.
  • Expungement: PIABA believes that it is too easy and common to obtain expungement, and wants to change that. First of all, I do not agree that it is easy to get expungement. FINRA arbitrators are well aware that FINRA considers expungement to be an “extraordinary remedy,” and appropriately put applicants through the wringer to establish that expungement is correct. Beyond that, it is rather ironic that while complaining about the supposed ease of obtaining expungement, once claimants’ lawyers have their settlements in hand, only very, very rarely do they deign to participate in the expungement portion of the hearing. For the most part, they don’t bother, and, frankly, why should they? They already got their money.
  • Non-attorney representatives: Unless state law prohibits it, a claimant in a FINRA arbitration may be represented by a non-lawyer. PIABA is against this, ostensibly in the interest of seeing that claimants have proper, competent representatives. I wonder, however, if it is simply more about eliminating a source of competition for potential clients? I mean, if PIABA truly cared about the quality of FINRA arbitrations and the fairness of such proceedings, it wouldn’t fight so hard to keep educated, trained people off the panels.