A former Commonwealth Financial Network client has scored a six-figure victory against the independent broker-dealer in a FINRA arbitration hearing.

A panel this week awarded Larry Hamilton $580,000 in damages, according to FINRA documents. Hamilton had claimed the Commonwealth advisor he had dealt with breached his fiduciary duty with a "recommendation ... to retire early and  the subsequent roll-over of shares of his employee stock ownership plan into a 72(t) IRA account and a non-72 (t) IRA account," according to the dispute resolution filing.

"The accounts did well for a little bit, but then they declined in value by quite a sum in money," says Hamilton's attorney in the proceedings, Jonathan E. Neuman. Neither Neuman nor a spokeswoman for Commonwealth would discuss how the advisor's recommendation constituted a fiduciary breach.

The FINRA dispute resolution filing also did not name Hamilton's former advisor.


Hamilton filed a claim last October for $1 million against Waltham, Mass.-based Commonwealth -- which sought to dismiss the claim, according to FINRA documents, arguing that it was filed more than six years after the client's losses.

The arbitration panel, based in Charlotte, N.C., sided with Hamilton, awarding him damages, and additionally ordering Commonwealth to pick up the $7,200 in court fees.

"We went in, we tried our case, we believed in our case, and we won our case," says Neuman, whose practice is in Fresh Meadows, N.Y.

A Commonwealth statement noted the company's disagreement with the award. "While we take exception to the panel's decision and we do not believe our advisor acted improperly, we will abide by the FINRA arbitration panel's ruling," the statement said.

Neuman says he and his client knew the obstacles in obtaining a successful claim against a firm in arbitration hearings. "Obviously we discussed the percentages of victories," Neuman says. "We knew going in that the odds were statistically against us, regardless of how well we made our case." 

FINRA statistics show that this year, 41% of arbitration cases involving customers and member firms that went before a panel resulted in damages awarded to a customer. That figure does not include the number of out-of-hearing settlements that provide customer compensation for claims, FINRA officials note.   

"We talked about the fact that even though we put on a great case, we shouldn't get our hopes up," Neuman adds. "But we got a great award, so we are very happy."

Read more:

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access