Award FINRA Office of Dispute Resolution In the Matter of the Arbitration Between: Claimant Case Number: 15-03368 Whitman B. Evans VS. Respondents Morgan Stanley Smith Barney, LLC and Charles Alan Correa! Hearing Site: Pittsburgh, Pennsylvania Nature of the Dispute: Customer vs. Member and Associated Person This case was decided by an all-public panel. REPRESENTATION OF PARTIES For Claimant Whitman B. Evans ("Claimant" or "Evans"): Michael J. Betts, Esq., Post & Schell, P.C., Pittsburgh, Pennsylvania. For Respondents Morgan Stanley Smith Barney, LLC ("Morgan Stanley") and Charles Alan Correal ("Correal"), hereinafter collectively referred to as "Respondents": Chan H. Nam, Esq., Morgan Stanley, New York, New York. CASE INFORMATION Statement of Claim filed on or about: December 16, 2015. Evans signed the Submission Agreement: December 16, 2015. Statement of Answer filed by Respondents on or about: March 10, 2016. Morgan Stanley signed the Submission Agreement: March 10, 2016. CASE SUMMARY Claimant asserted the following causes of action: breach of fiduciary duty, violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, suitability violations, professional negligence, breach of contract, breach of the duty of good faith and fair dealing, failure to supervise, respondeat superior, and vicarious liability. Claimant alleged that Respondents invested his retirement assets in a highly aggressive and reckless manner, which was not suitable for his age and risk tolerance. Unless specifically admitted in their Statement of Answer, Respondents denied the allegations made in the Statement of Claim and asserted various affirmative defenses.
Award Page 2 of 5 RELIEF REQUESTED In the Statement of Claim, Claimant requested: Compensatory Damages (in excess of) $290,000.00 Punitive Damages Unspecified Treble Damages (in excess of) $580,000.00 Attorneys Fees Unspecified Other Costs Unspecified Other Monetary Relief Unspecified In the Statement of Answer, Respondents requested that the claims asserted against them be denied in their entirety. Correal requested expungement of all references to this matter from his registration records maintained by the Central Registration Depository ("CRD"). OTHER ISSUES CONSIDERED AND DECIDED The Arbitrators acknowledge that they each read the pleadings and other materials filed by the parties. Correal did not file with FINRA Office of Dispute Resolution a properly executed Submission Agreement, but is required to submit to arbitration pursuant to the Code of Arbitration Procedure ("Code") and, having answered the claim, appeared, and testified at the hearing, is bound by the determination of the Panel on all issues submitted. On or about April 15, 2016, the parties filed a Joint Request to Forgo the Initial Pre- Hearing Conference (IPHC"). On or about October 26, 2016, Respondents filed a Motion in Limine to Bar Testimony of former clients of Correal. At the hearing, this motion was rendered moot by Claimant's assurances that such witnesses, if called at all, would be called to testify as rebuttal witnesses and not as part of Claimant's case-in-chief. The witnesses were not called to testify. At the final hearing, which was recorded, the Panel heard oral argument and evidence on Correal's request for expungement. Claimant contested the request for expungement. The Panel reviewed the BrokerCheck Report for Correal. In recommending expungement the Panel relied upon the following documentary or other evidence: the testimony of Claimant and Correal. The Panel concluded that the registered person provided the more credible account of events and Claimant's risk tolerance, preferred investments, and associated risks. 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 Page 3 of 5 AWARD After considering the pleadings, the testimony and evidence presented at the hearing, the Panel has decided in full and final resolution of the issues submitted for determination as follows: 1. Claimant's claims, each and all, are hereby denied. 2. The Panel recommends the expungement of all references to the above-captioned arbitration from registration records maintained by the CRD, for Respondent Charles Alan Correal (CRD #1366202), with the understanding that, pursuant to Notice to Members 04-16, Respondent Charles Alan Correal 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 F1NRA as an additional party and serve FINRA with all appropriate documents. Pursuant to Rule 12805 of the Code, the Panel has made the following Rule 2080 affirmative finding of fact: 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: The Panel determined that the allegation that Correal had committed the alleged investment-related sales practice violations was not supported by credible evidence. Correal performed in a manner consistent with the client's stated wishes of "investment growth." The client did not regard this as a retirement account. 3.Other than forum fec.s, which are eporsifiad below, the parties shnll Parth hear their own costs and expenses incurred in this matter. 4. Any and all claims for relief not specifically addressed herein, including punitive damages, treble damages, and attorneys fees, are denied. FEES Pursuant to the Code, the following fees are assessed: Filing Fees FINRA Office of Dispute Resolution assessed a filing fee* for each claim: Initial Claim Filing Fee =$ 1,725.00
Award Page 4 of 5 *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 that employed the associated person at the time of the events giving rise to the dispute. Accordingly, as a party, Morgan Stanley Smith Barney, LLC 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 arbitrators, including a pre-hearing conference with the arbitrators, that lasts four (4) hours or less. Fees associated with these proceedings are: Six (6) hearing sessions @ $1,300.00/session =$ 7,800.00 Hearing Dates: November 15, 2016 2 sessions November 16, 2016 2 sessions November 17, 2016 2 sessions Total Hearing Session Fees =$7,800.00 The Panel has assessed $3,900.00 of the hearing session fees to Claimant Whitman B. Evans. The Panel has assessed $3,900.00 of the hearing session fees to Respondent Morgan Stanley Smith Barney, LLC. All balances are payable to FINRA Office of Dispute Resolution and are due upon receipt.
Award Facie 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 /s/ November 25, 2016, Presiding Chairperson /s/ November 25, 2016 /s/ November 25, 2016 November 25, 2016 Date of Service (For FINRA Office of Dispute Resolution office use only)
Arbitration No, 15-03368 Award Page 5 of 5 ARBITRATION PANEL, Presiding Chairperson l, 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 Date of Service (For F1NRA Office of Dispute Resolution office use only)
'F1NRA Office of Dispute Resolution Award.1)?_ge 5 of 5 ARBITRATION PANEL, Presiding Chairperson I, the undersigned Arbitrator, do hereby affirm that l am the individual described herein and who executed this instrument, which is my award. Concurring Arbitrators Signatures Public Arbitrato, Presiding Chairperson M. Thevenet S Da e of Service (For F1NRA Office of Dispute Resolution office use only)
in ijp of Dispute Resolution ArbiLiition No 15-03368 Award Pao6 5 of 5 ARBITRATION PANEL, Presiding Chairperson l, the undersigned Arbitrator, do hereby affirm that l am the individual described herein and who executed this instrument, which is my award. Concurring Arbitrators Signatures Pyblic Arbitrator, Presiding Chairperson 'MU man' M. Thevenet Public' Arbitrator,2 5/07-p/6 Signature ate Date of Service (For FINRA Office of Dispute Resolution office use only)