RECENT ARBITRATION DECISION INVOLVING FINRA RULE 12206 AND EQUITABLE TOLLING
Recent Arbitration Decision Involving FINRA Rule 12206 and Equitable Tolling
Israels & Neuman, PLC was recently involved in an arbitration matter of Weber v. PIM Financial Services, Inc. et al. In this matter, which was filed in September 2015, the Claimants alleged that they were defrauded by financial advisor Burgess Hallums, who was later sentenced to serve 5 years and 8 months in prison for his fraudulent conduct. Hallums was a registered representative of PIM Financial Services between December 1990 and September 1997. One of the Claimants alleges to have made an investment through Hallums in August 1997, while Hallums was affiliated with PIM Financial.
The Claimants brought claims against PIM Financial Services and other Respondents, alleging that PIM Financial failed to adequately supervise Hallums. The Claimants also brought claims against PIM’s former President, CEO, Chief Compliance Officer, and Director – Mary Limoges – arguing that she is “control person” under California securities statutes and further alleges that her “control person” status subjects her to liability for the Claimant’s losses.
PIM Financial Services and Limoges filed a motion to dismiss under FINRA Rule 12206, arguing that the August 1997 investment was ineligible for arbitration. They argued that more than six years had passed since the investment was made, and that therefore, the claims regarding the August 1997 investment were ineligible pursuant to FINRA Rule 12206. In response, the Claimants argued that FINRA Rule 12206 and its predecessors were subject to equitable tolling and the discovery rule and that the Claimant did not discover Hallums’ fraud until many years after the investments, and that she discovered the wrongdoing within six years of filing the Statement of Claim.
On or about September 8, 2016, the arbitration panel entered an order which unanimously denied PIM Financial and Limoges’ motion to dismiss. Pursuant to FINRA Rule 12206(B)(8), all forum fees associated with the motion were assessed against PIM Financial and Limoges. While the arbitrators did not specify the reasoning for its ruling (which is common in FINRA proceedings), Israels & Neuman, PLC believes the interpreted case law surrounding Rule 12206 to mean that the Rule is subject to tolling or the discovery rule (at least for purposes of a motion to dismiss), since the investment was made roughly 18 years before the Statement of Claim was filed in this matter.
Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado; the Seattle, Washington area; Ann Arbor, Michigan; and Vancouver, Washington. We represent investors in FINRA arbitration proceedings in all 50 states. Our attorneys have represented over one thousand investors against many brokerage firms in the past.
Our office handles all of our arbitration cases on a contingent fee basis, meaning you do not pay unless we recover money for you.
If you lost money with your financial advisor or brokerage firm, please CONTACT ISRAELS & NEUMAN AT 720-599-3505 for a free evaluation of your case.