Award FINRA Office of Dispute Resolution In the Matter of the Arbitration Between: Claimant Lisa Pola Case Number: 17-01020 vs. Respondents Morgan Stanley Robert Lee Perry Hearing Site: Los Angeles, California Nature of the Dispute: Customer vs. Member and Associated Person This case was decided by an all-public panel. REPRESENTATION OF PARTIES For Claimant Lisa Pola Westcliffe, Colorado. : Tracy Pride Stoneman, Esq., Stoneman Law, and Robert Lee Perry : John S. Worden, Esq. and Sarah K. Schiferl, Esq., Schiff Hardin LLP, San Francisco, California. CASE INFORMATION Statement of Claim filed on or about: April 21, 2017. Claimant signed the Submission Agreement: April 21, 2017. Statement of Answer filed by Respondents on or about: July 28, 2017. MS signed the Submission Agreement: June 1, 2017. Perry signed the Submission Agreement: September 22, 2017. CASE SUMMARY Claimant asserted the following causes of action: violations of federal securities laws and rules including 15 U.S.C.A. 78j (manipulative and deceptive devises), 15 U.S.C.A. 78t (liability of controlling persons and persons who aid and abet violations), Section 10(b) of the Securities Exchange Act of 1934, Exchange Act Rule 10b-5, 17 C.F.R. 240.10(b)-5 (employment of manipulative and deceptive devices); violations of the California Corporate Securities Law of 1968; violation of the California Consumers Legal Remedies Act; constructive fraud under California Civil Code 1573; actual fraud under California Civil Code 1572; negligence/breach of industry standards; breach of contract; common law fraud misrepresentations and omissions; breach of fiduciary
Award Page 2 of 5 duty; respondeat superior liability; and failure to supervise. relate to her investments in unspecified options and Respondents use of margin in two Unless specifically admitted in the Statement of Answer, Respondents denied the allegations made in the Statement of Claim and asserted various affirmative defenses. RELIEF REQUESTED In the Statement of Claim, Claimant requested: 1. Compensatory damages of at least $550,000.00; 2. Pre-judgment and post-judgment interest at the maximum rate allowed by law; 3. Total commissions that MS and unnamed party September Joy Sarno (associated person ) earned 4. Reimbursement of all FINRA arbitration-related costs and fees, including any expert fees and filing fees; 5. 6. Punitive or treble damages as allowed by law; and 7. Such other and further relief as the Panel deems appropriate. In the Statement of Answer, Respondents requested: 1. Claimant take nothing by reason of the Statement of Claim; 2. Expungement of any reference to this matter from the Central Registration unnamed party Sarno; and 3. Whatever relief the Panel may deem appropriate. OTHER ISSUES CONSIDERED AND DECIDED The Arbitrators acknowledge that they have each read the pleadings and other materials filed by the parties. The Panel conducted the recorded in-person hearing on the expungement requests during the evidentiary hearing. Claimant opposed the expungement requests. The Panel reviewed the BrokerCheck Reports for Perry and unnamed party Sarno. In recommending expungement, the Panel relied upon the following documentary or other evidence: testimony of all witnesses; and documents which supported proper trade practices by unnamed party Sarno and MS. The parties have agreed that the Award in this matter may be executed in counterpart copies or that a handwritten, signed Award may be entered. AWARD After considering the pleadings, the testimony and evidence presented at the hearing, and post-hearing submission, the Panel has decided in full and final resolution of the issues submitted for determination as follows:
Award Page 3 of 5 1. Claimant claims are denied in their entirety. 2. The Panel recommends the expungement of all references to the above-captioned arbitration from registration records maintained by the CRD, for Respondent Robert Lee Perry (CRD # 1354892) and unnamed party September Joy Sarno (CRD # 1014809), with the understanding that, pursuant to Notice to Members 04-16, Respondent Robert Lee Perry and unnamed party September Joy Sarno must obtain confirmation from a court of competent jurisdiction before the CRD will execute the expungement directive. Unless specifically waived in writing by FINRA, parties seeking judicial confirmation of an arbitration award containing expungement relief must name FINRA as an additional party and serve FINRA with all appropriate documents. Unnamed party September Joy Sarno (CRD # 1014809) Pursuant to Rule 12805 of the Code, the Panel made the following Rule 2080 affirmative finding of fact for unnamed party Sarno: The claim, allegation, or information is false. The Panel has made the above Rule 2080 affirmative finding of fact for unnamed party Sarno based on the following reasons: Unnamed party Sarno was diligent in her duties. She only had 15 to 20 clients and interacted with almost each of them every day, sometimes more than once a day. Unnamed party Sarno is not a typical financial advisor in that sense. From both oral testimony and documentary evidence, it is clear that all the trades were authorized, and all were suitable given the Claimant's investment profile. Respondent Robert Lee Perry (CRD # 1354892) Pursuant to Rule 12805 of the Code, the Panel has made the following Rule 2080 affirmative finding of fact for Perry: The registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds. The Panel has made the above Rule 2080 finding based on the following reasons: Perry was the office supervisor, but would have had no reason at all to suspect that there would be any claims against unnamed party Sarno. The Panel found that Perry supervised adequately. 3. Any and all claims for relief not specifically addressed herein, including treble damages, are denied. FEES Pursuant to the Code, the following fees are assessed:
Award Page 4 of 5 Filing Fees FINRA Office of Dispute Resolution assessed a filing fee* for each claim: Initial Claim Filing Fee =$ 1,725.00 *The filing fee is made up of a non-refundable and a refundable portion. Member Fees Member fees are assessed to each member firm that is a party in these proceedings or to the member firm(s) that employed the associated person(s) at the time of the event(s) giving rise to the dispute. Accordingly, as a party, Morgan Stanley is assessed the following: Member Surcharge =$ 2,475.00 Member Process Fee =$ 5,075.00 Hearing Session Fees and Assessments The Panel has assessed hearing session fees for each session conducted. A session is any meeting between the parties and the arbitrator(s), including a pre-hearing conference with the arbitrator(s), that lasts four (4) hours or less. Fees associated with these proceedings are: One (1) pre-hearing session with the Panel @ $1,300.00/session =$ 1,300.00 Pre-hearing conference: September 13, 2017 1 session Ten (10) hearing sessions @ $1,300.00/session =$13,000.00 Hearing Dates: June 4, 2018 June 5, 2018 June 6, 2018 June 7, 2018 June 8, 2018 Total Hearing Session Fees =$14,300.00 The Panel has assessed $8,580.00 of the hearing session fees to Claimant. The Panel has assessed $5,720.00 of the hearing session fees jointly and severally to Respondents. All balances are payable to FINRA Office of Dispute Resolution and are due upon receipt.
Award Page 5 of 5 ARBITRATION PANEL, Presiding Chairperson I, the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures, Presiding Chairperson Signatre Date June 22, 2018 Date of Service (For FINRA Office of Dispute Resolution office use only)
Award Page 5 of 5 ARBITRATION PANEL, Presiding Chairperson I, the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures, Presiding Chairperson ~0L11! au June 22, 2018 Date of Service (For FINRA Office of Dispute Resolution office use only)
Award Page 5 of 5 ARBITRATION PANEL -, Presiding Chairperson - - I, the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators' Signatures, Presiding Chairperson 6/22/2018 June 22, 2018 Date of Service (For FINRA Office of Dispute Resolution office use only)