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*** FILED: BROWARD COUNTY. FL HOWARD FORMAN, CLERK 7/3/2013 3:37:09 PM.****
Case Number: CACE-13-016070 Division: 25
tronically Filed 07/03/2013 03:37:11 PM ET.
NW#ELI- 2276
IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT,
IN AND FOR BROWARD COUNTY, FLORIDA
PFS INVESTMENTS INC., a
foreign corporation, and
LAWRENCE MAURICE COOK,
Petitioners,
v.
BERNETTA DESHAZIOR,
Respondent.
MSS SS SSS
APPLICATION AND MOTION TO VACATE ARBITRATION AWARD
Pursuant to the Federal Arbitration Act, 9 U.S.C. § 10 (“FAA”), and the Florida
Arbitration Code, Fla. Stat. § 682.01 et seg., PFS Investments Inc. (“Primerica”) and Lawrence
Maurice Cook respectfully bring this action to vacate an arbitration award (the “Award”)
improperly issued by a panel of arbitrators in Bernetta DeShazior v. PFS Investments Inc. and
Lawrence Maurice Cook, FINRA Case No. 12-00361 (the “Arbitration”). In support of their
Application and Motion to vacate the Award, Petitioners state as follows:
INTRODUCTION
1. This case arises out of an Arbitration conducted before the Financial Industry
Regulatory Authority (“FINRA”). In that arbitration, the Claimant Bernetta DeShazior
(“Deshazior”) complained that she was induced to make a supposedly “wrong choice” between
two retirement plan options offered by her employer, Miami-Dade County Public Schools.
DeShazior made that personal employee benefit choice after receiving substantial information
and disclosures from the State of Florida in connection with her participation in the Florida
Broad and Cassel
100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060
caseno, AS“ EO FOCIRetirement System (“FRS”). The FRS retirement benefits and programs are in no way affiliated
with Petitioners Primerica or Cook. In fact, DeShazior was never a customer of Primerica or
Cook for any of her FRS accounts and never invested any such retirement funds with Primerica.
Nevertheless, she argued that her FRS benefit plan choice amounted to the sale of a security and
that Primerica and Cook improperly caused her to choose the FRS Investment Plan option,
thereby subjecting her to market risk.
2. Primerica and Cook defended these claims on various legal and factual grounds,
including the facts that the FRS fully educates all public employees, including DeShazior, on
their retirement plan options and there is no “wrong choice” among those alternative plans as
designed and administered by the FRS. After the hearings, the arbitrators improperly issued an
Award in favor of DeShazior and against Primerica in the amount of $187,500. However, at the
same time, the arbitrators dismissed, with prejudice, all claims asserted by DeShazior against
Cook — who acted only as Primerica’s representative. Thus, the Award reflects the incongruous
and inconsistent result of holding the Primerica derivatively liable to DeShazior for the acts of its
agent (Cook), while simultaneously finding no basis for any misconduct or liability by Cook to
DeShazior. This inconsistency is sufficient to show that the Award was improperly entered and
reflects bias against Primerica.!
3. Moreover, the Award against Primerica should be vacated by this Court because it
teflects the actual existence of improper arbitrator bias, as well as a reasonable impression of
‘The Award expressly found no liability on the part of Respondent Cook and dismissed all claims against Cook,
with prejudice. Thus, although the evident partiality and bias on the part of the Arbitrators resulted in an award
against Respondent Primerica, it apparently did not result in any direct prejudice as to Respondent Cook.
Accordingly, Petitioners Primerica and Cook jointly seek to vacate the Award entered against Primerica, and do not
seek vacatur of the remaining portions of the Award reflecting dismissal of claims against Cook or assessment of
hearing costs and fees among the parties.
2
Broad and Cassel
100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060bias, against Primerica. The bias of a single arbitrator on a three-person panel is sufficient to
require vacatur of the Award. Even where the Award is unanimous, a single biased arbitrator
can and will infect an entire panel of arbitrators, as occurred in this case. See Schmitz v. Zilveti,
20 F.3d 1043, 1049 (9th Cir. 1994). Here, the Award was improperly entered against Primerica
and should be vacated for “evident partiality” on the part of the Arbitrators. As discussed more
fully below, the apparent bias, or the reasonable impression of bias, of the arbitrators provides
substantial grounds on which this Court should vacate the Award. See Commonwealth Coatings
Corp. v. Cont. Cas. Co., 393 U.S. 145, 149 (1968). 2
4. First, Chairman William Alheim, failed to make any timely disclosure to
Primerica that he, like Claimant DeShazior, is a participant in the FRS retirement program at
issue in the Arbitration; has a direct personal financial relationship with the FRS; and, on
information and belicf, he received similar FRS information and disclosures as Claimant
DeShazior, which were the subject of the disputes in the Arbitration. Chairman Alheim also
made his own personal choices about the FRS retirement programs at issue and may have formed
opinions about which choices and options were appropriate. Chairman Alheim was required to
disclose these important facts, including, but not limited to, his direct participation in the FRS
program and his personal financial relationship with FRS prior to the commencement of the
Arbitration hearings. Among other things, those matters reflect that Chairman Alheim had pre-
conceived opinions and biases about the FRS programs and about the important issue of whether
information provided by the FRS to plan participants, like DeShazior, was sufficient to cause
them to make independent and informed decisions regarding their FRS plan options. Chairman
2 Petitioners intend to seek discovery in this proceeding and reserve their right to amend this Motion and to file a
brief of points and authorities in support of vacatur.
3
Broad and Cassel
100 S.B. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060Alheim’s failure to disclose these facts constitutes “evident partiality” because it creates a
reasonable impression of possible bias in the Arbitration.
5. Second, through various statements and actions during the hearings, Arbitrator
Paul Chernis displayed evident and actual bias and partiality in favor of Claimant and against
Primerica. The actual bias of Arbitrator Chernis manifested itself directly in the manner in
which he conducted the Arbitration and in various comments made by Arbitrator Chernis during
the proceedings. Instead of complying with FINRA rules and procedures demanding that
arbitrators serve as neutrals and allow the parties and their counsel to try their own cases,
Arbitrator Chemis engaged in unfair and aggressive questioning of witnesses, and effectively
took the reins of the hearing from counsel in order to make points he perceived to benefit the
Claimant’s case. In effect, Arbitrator Chernis became a partisan advocate for DeShazior and
sought through his advocacy to persuade the other Arbitrators on the merits of her alleged
claims, Arbitrator Chernis’s actual biases during the hearings are more than sufficient grounds
for vacatur of the Award under Section 10(a)(2) of the FAA, as is his “misbehavior by which the
rights of [Petitioners] have been prejudiced” under Section 10(a)(3).2
PARTIES, JURISDICTION, AND VENUE
6. Petitioner Primerica is a Georgia corporation with its principal place of business
in Duluth, Georgia.
* It appears that Arbitrator Chernis also used his influence on the other Arbitrators to inject into the Award an
inaccurate statement regarding Petitioners’ motion to dismiss made during the hearings and to promote his incorrect
interpretation on a key point of law. In particular, the Award includes a statement that Petitioners moved to dismiss
the claims on the grounds that the FRS benefit choice did not involve any security and then states that such motion
was denied by the Panel. In fact, no such motion to dismiss was made on the specific grounds stated in the Award.
And, in any event, any such legal conclusion reflected in the award flatly contradicts the law, as provided by
Petitioners to the Arbitrators during the hearings, including the holding of the United States Supreme Court and
findings by the Securities and Exchange Commission that such employee benefit plans are not securities.
4
Broad and Cassel
100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.70607. Petitioner Lawrence Maurice Cook is a resident and citizen of the State of Florida.
Cook has been a FINRA registered representative of PFSI since 2002.
8. DeShazior is a resident of Broward County, Florida and a citizen of the State of
Florida. Jurisdiction is proper in this Court pursuant to § 682.18, Florida Statutes, and venue is
proper in this Court pursuant to § 682.19, Florida Statutes, because Respondent is a resident of
Broward County.
9. FINRA issued the defective Award of the Arbitrators on June 4, 2013, and
accordingly this Motion is timely pursuant to § 682.13(2), Florida Statutes. A true and correct
copy of the Arbitration Award is attached as Exhibit A.
FACTUAL AND PROCEDURAL BACKGROUND
10. On or about February 1, 2012, DeShazior initiated the Arbitration by filing her
Statement of Claim with FINRA against Petitioners. The Statement of Claim sets forth in detail
DeShazior’s complaint about her participation in the FRS and her personal benefit choices made
in connection with her FRS account, which was never held in any custody of Primerica. The
Arbitration hearings were conducted in Miami, Florida over nine full days on April 8-12, 25, 26,
and 29, and May 2-3, 2013.
11. Chairman Alheim violated his disclosure obligations under FINRA rules and
showed his evident partiality in the matter by failing to make timely disclosures of important
facts showing his own participation and personal opinions and financial interests in the FRS
employee benefit programs, which lie at the heart of the disputes in this matter. FINRA rules,
procedures and publications compel arbitrators to make on-the-record disclosures to the parties
and as soon and as thoroughly as possible as to any such matters that could create any potential
for bias. For example, in order to ensure arbitrator impartiality, FINRA requires every arbitrator,
5
Broad and Cassel
100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060including Chairman Alheim, to disclose “any circumstances which might preclude [him] from
rendering an objective and impartial determination in the proceeding.” FINRA Rule 12405(a)
(Copy attached as Exhibit B).
12. Disclosures made by arbitrators are critical to the arbitrator selection process.
FINRA directs all arbitrators to perform conflict checks, read the statement of claim and answer,
and complete Disclosure Checklists (which are supplied to the parties). (Copies of the arbitrator
disclosures are attached as Exhibit C.) The Disclosure Checklist “not only provides a reminder
to the arbitrators to consider all possible disclosures, but also requires a complete explanation of
any possible conflict to the parties,” including affirmative responses to questions seeking
potential conflicts. (Disclosure Checklist, at cover page, Ex. C.)
13. The Disclosure Checklist that Chairman Alheim completed contains numerous
specific questions that must be answered accurately by every arbitrator, including:
8. Have you formed an opinion, positive or negative, about ...
the subject matter of the arbitration?
9.A. Have you, your spouse, or an immediate family member
invested in or held any of the securities that are the subject of the
arbitration?
(Ex. C, at p. 5.) Chairman Alheim incorrectly answered “no” to each of these questions. In fact,
Chairman Alheim had an undisclosed direct personal financial interest and relationship with the
FRS and, upon information and belief, had received the same or similar FRS information and
disclosures as did DeShazior about the FRS programs and had pre-conceived opinions and
beliefs about the sufficiency of the FRS information and materials and the propriety of his own
FRS benefit plan choice. In essence, those prior, personal experiences of Chairman Alheim
mirrored the claims asserted by DeShazior in this arbitration.
6
Broad and Cassel
100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.706014. If Chairman Alheim had adequately and timely disclosed his pre-existing opinions
and beliefs and his personal participation and direct financial relationship with the FRS, then
Petitioners would have had several options available to them. Petitioners could have (1) ranked
Chairman Alheim differently during the initial arbitrator ranking process, (2) sought to remove
Chairman Alheim from the arbitration panel for cause under FINRA Rule 12407, (3) asked
Chairman Alheim directly to recuse himself under FINRA Rule 12406, (4) tailored their
presentation of evidence and argument during the Arbitration to address the likely concerns of an
arbitrator in Chairman Alheim’s position, or (5) accepted that Chairman Alheim had prejudged
the matter against Petitioners, and settled the case. Chairman Alheim’s failure to disclose these
important matters deprived Petitioners of the ability to act while in full possession of the facts.‘
15. In addition, Arbitrator Chernis also failed to make proper disclosures of required
information reflecting his own evident partiality against Primerica. For example, Arbitrator
Chernis failed to fully disclose that he and/or his law firm previously represented several
claimants who, like DeShazior, brought claims in arbitration against broker-dealer respondents,
like Primerica. Similarly, Arbitrator Chernis also failed to properly disclose a lawsuit filed
against himself and his law firm in 2001, which was further material information that should
have been provided to Respondents. These failures by Arbitrator Chernis to properly disclose
material information impacting his service in this arbitration provide further evidence of his bias
against Primerica. (See Ex.C at 9).
16. | Chairman Alheim and Arbitrator Chernis demonstrated their evident partiality
against Primerica and in favor of DeShazior by failing to make timely disclosures of important
4 As the FINRA rules make clear, such disclosures must be made prior to commencement of the arbitration hearings
in order to allow the parties to effectively review and act upon that information. When such timely disclosures are
not made, as in this case, then the parties face a Hobson’s Choice of raising those matters during the hearings and
vety likely exacerbating the prejudice of the Arbitrators’ bias at the same time they are engaged in deciding the case.
7
Broad and Cassel
100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060and material information regarding their service as arbitrators in this case. These failures to meet
the FINRA disclosure obligations create the reasonable impression of actual arbitrator bias and
the requirement to vacate the Award against Primerica.
17. In addition, and as a separate and independent grounds for vacatur of the Award,
during the evidentiary hearings, Arbitrator Chernis repeatedly evidenced his actual bias against
Primerica and engaged in misconduct by taking over the evidentiary hearing and, like
DeShazior’s own counsel, served as an advocate for the Claimant by engaging in unfair and
misleading examinations of witnesses and by misinterpreting the evidentiary record for the
benefit of DeShazior. Arbitrator Chernis was actively engaged in the presentation of the
Claimant’s case and sought to affirmatively enhance and support the arguments made by
DeShazior’s own lawyers. At times, Arbitrator Chernis so aggressively misstated the evidence
in favor of DeShazior that her own lawyers were forced to acknowledge the overstatements by
Arbitrator Chernis.
18. Among many other things, Arbitrator Chernis showed his evident partiality for the
Claimant by asking favorable, leading questions of DeShazior’s witnesses, which were clearly
designed to elicit answers that would support DeShazior’s claims. These efforts by Arbitrator
Chernis seemed not just to support the Claimant’s case, but to enhance and expand the arguments
for DeShazior, even when they were contrary to other facts reflected clearly by the evidence. In
contrast, Arbitrator Chernis repeatedly asked hostile and argumentative questions directed to
Petitioners’ witnesses in efforts to criticize or undermine the positions taken in defense of the
arbitration claims.
19, During the Arbitration hearings, Arbitrator Chernis repeatedly displayed actual
bias under Section 10(a)(2) of the FAA and committed “misbehavior by which the rights of
8
Broad and Cassel
100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060[Petitioners] have been prejudiced” under Section 10(a)(3), each of which provides an
independent basis for vacatur of the Award against Primerica. Likewise, the inclusion in the
Award of an incorrect statement of law on whether the employee benefit program choice could
be a security further reflects the actual bias of Arbitrator Chernis against Primerica.
CONCLUSION
20. For the reasons set forth above, Petitioners respectfully request that this Court
vacate the Award in the amount of $187,500 against Primerica and remand this matter to FINRA
for a new arbitration on DeShazior’s alleged claims against Primerica before a different and
impartial panel of arbitrators.
Dated this 3" day of July, 2013.
Respectfully submitted,
lam G. Rabinowitz, P.A.
lorida Bar No. 177962
ARabinowitz@BroadandCassel.com
sbrown@broadandcassel.com
Mark F. Raymond, P.A.
Florida Bar No. 373397
MRaymond@BroadandCassel.com
ssmith@broadandcassel.com
100 S.E. 3" Ave, Suite 2700
Fort Lauderdale, Florida 33394-0002
Tel: 954.764.7060 Jae
Fax: 954.713.0981
Counsel for PFS Investments Inc, and
Lawrence Cook
4847-4801-51242
9
Broad and Cassel
100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.70602013-06-04 16:24 y 1 >> BROAD AND CASSEL P 1/14
FINRA Dispute Resolution
Southeast Processing Center
Boca Center Tower 1
§200 Town Center Circle 4
Boca Raton, FL 33486
Email:FL-Main@finra.org Fl n fa
Phone: 561-416-0277
Fax: 301-527-4868
Number of Pages including the Cover Sheet: i
Date: 06/04/2013
Case Number: —12-00361
Case Name: Bernetta DeShazior vs, PFS Investments, Inc. and Lawrence M. Cook
To: Mark F. Raymond
Phone: 305-373-9425 Fax: 305-995-6385
From: William Cassidy],
Scnior Case Administrator
Message:
1 A
This facsimile transmission fs intended only for the addressee(s) showa above, It may contain information thal is privileged,
confidential, or otherwise protected from disclosure. Any revicw, dissemination or use of this transmission or ils contents by
persons other than addressce is strictly prohibited. If you have received this transmission in crror, please notify ux
immediately by telephone at (he above number,2013-06-04 16:24 y 1 >> BROAD AND CASSEL P 2/14
Finra®
Financlal Industry Regulatory Authority
VIA FACSIMILE AND MAIL
dune 4, 2013
Mark F, Raymond, Esq.
Broad and Cassel
2 South Biscayne Boulevard
Miami, FL 33131
Subject: FINRA Dispute Resolution Arbitration Number 12-00361
Bernetta DeShazior vs. PFS Investments, Inc. and Lawrence M. Cook
Dear Mr. Raymond:
Enclosed please find the decision reached by the arbitrators in the above-referenced matter.
Responsibility to Pay Monetary Award
FINRA rules provide that all monetary awards shalll be paid within 30 days of receipt unless a
motion to vacate has been filed with a court of competent jurisdiction. An award shail bear
interest from the date of the award:
* If not paid within 30 days of receipt;
«ifthe award is the subject of a motion to vacate which is denied; or
* As specified by the panel in the award.
Interest shall be assessed at the legal rate, if any, then prevailing in the state where the award
was rendered, or at a rate set by the arbitrator(s),
‘xpedited Suspension Proceed jon-P: nt of Award:
Article VI, Section 3 of the FINRA By-Laws and FINRA Rule 9554 permit FINRA to suspend or
cancel the registration of any firm or associated person that fails to comply with a FINRA
arbitration award,
Firms are required to notify FINRA in writing within 30 days of receipt of an award that they or
their associated persons have paid or otherwise complied with the award, or to identify a valid
basis for non-payment. We also request that prevailing claimants notify us in writing when their
awards have not been paid within 30 days of receipt of the award.
Written notification concerning award compliance or lack thereof should be directed to:
David Carey
Investor protection, Market Integrity, Dispute Resolution Bota Center Tower 1 1 $63 416 0277
Southeast Repjonal Office 5200 town Center Circle ¥ 303 527 4868
Suite 200 wwweéinna.or
Boca Raton, FL
F2496-10152013-06-04 16:24 y 4 >> BROAD AND CASSEL P 3/14
FINRA Dispute Resolution
One Liberty Plaza, 165 Broadway, 52nd Floor
New York, NY 10006
212-858-4333 (tel) | 301-527-4706 (fax) | david.carey@finra.org (email)
Right to File Motion to Vacate Award
FINRA rules provide that, unless the applicable law directs otherwise, all awards rendered are
final and are not subject to review or appeal, Accordingly, FINRA has no authority to vacate this
award. Any party wishing to challenge the award must make a motion to vacate the award ina
federal or state court of appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. §
40, or applicable state statute. There are limited grounds for vacating an arbitration award, and a
party must bring a motion to vacate within the time period specified by the applicable statute. If
you are not represented by counsel and wish to challenge the award, we urge you to seek legal
advice regarding any rights or remedies available to you,
Forum Fees
You will receive under separate cover an invoice that reflects the fees assessed and any
outstanding balance or refund due. Fees are due and payable to FINRA Dispute Resolution
upon receipt of the invoice and should be sent to the address specified on the invoice. Any
applicable refunds will also be sent under separate cover approximately 45 days after the case
closes. All questions regarding payment of fees and refunds should be directed to FINRA
Finance at (240) 386-5910.
Arbitrator Evaluation
FINRA encourages parties to complete Arbitrator Evaluation Forms at the conclusion of every
¢ase, We will utilize your comments in our ongoing efforts to evaluate and imprave the services
our forum provides. You can complete the Arbitrator Evaluation Form on our website at
www.finra.org/arbevaluation,
Party Submissions to Arbitrators After a Case Closes
FINRA rules provide that parties may not submit documents to arbitrators in cases that have
been closed except under the following limited circumstances: 1) as ordered by a court; 2)
at the request of any party within 10 days of service of an award, for typographical or
computational errors, or mistakes in the description of any person or property referred to in
the award; or 3) if all parties agree and submit documents within 10 days of service of an
award, Any documents, if submitted, must be sent through FINRA.2013-06-04 16:25 y 1 >> BROAD AND CASSEL P 4/14
Questions Conceming Award
Should you have any questions, please contact me at the phone number or email address
provided below. Parties should not directly contact arbitrators under any circumstances.
Very truly yours,
Wiliam J. Cassidy/CC
Williarn J, Cassidy
Senior Case Administrator
Phone; 561-416-0277
Fax: 301-527-4868
FL-Main@finra.org
WJC:ecl:LCOSA
idr: 08/29/2012
Enclosure
RECIPIENTS:
Richard L. Martens, Esq., Lawrence Maurice Cook
Ciklin Lubitz Martens & O'Connell, 515 North Flagler Drive, 20th Floor, West Palm
Beach, FL 33401
Mark F. Raymond, Esq., PFS Investments Inc.
Broad and Cassel, 2 South Biscayne Boulevard, Miami, FL 33131
Andrew V. Tramont, Esq., Bernetta DeShazior
Tramont Guerra & Nunez, P.A,, Alhambra International Genter, 255 Alhambra Circle,
Suite 1150, Coral Gables, FL 331342013-06-04 16:25 y 1 >> BROAD AND CASSEL P 5/14
FINfa
Financial industry Regulatory Authority
VIA FACSIMILE AND MAIL
dune 4, 2013
Mark F, Raymond, Esq,
Broad and Cassel
2 South Biscayne Boulevard
Miami, FL 33134
Subject. FINRA Dispute Resolution Arbitration Number 12-00361
Bernetta DeShazior vs. PFS Investments, inc. and Lawrence M. Cook
Dear Mr, Raymond:
Enclosed please find the decision reached by the arbitrators in the above-referenced matter.
FINRA rules provide that all monetary awards shall be paid within 30 days of receipt unless a
motion to vacate has been filed with a court of competent jurisdiction. An award shall accrue
interest from the date of the award:
* If not paid within 30 days of receipt;
* If the award is the subject of a motion to vacate which is denied; or
* As-specified by the panel in the award.
Interest shall be assessed at the legal rate, if any, then prevailing in the state where the award
was rendered, or at a rate set by the arbitrators.
Firms are required to notify FINRA in writing within 30 days of receipt of an award that they or
their associated persons have paid or otherwise complied with the award, or to identify a valid
basis for non-payment, The 30-day period ends on: July 5, 2013. Associated persons who
have changed employment since the arbitration claim was filed are required to notify FINRA
directly regarding the payment status of any awards against them. Please review Notice to
Members 00-55 for more information on the notification requirement and the sanctions for
noncompliance.
Written notification concerning award compliance or lack thereof should be directed to:
David Carey
FINRA Dispute Resolution
One Liberty Plaza, 165 Broadway, 52nd Floor
New York, NY 10006
212-858-4333 (tel) | 301-527-4706 (fax) | david.carey@finra.org (email)
Investor protection, Market Integrity. Dispute Resolution Bows Center Tower 1 t 5614160277
Southeast Regional Office 5200 Town Center Circle f 3015274868
‘Suite 200 www finra.orp,
Bora Raton, H
33486-1015,2013-06-04 16:25 y 1 >> BROAD AND CASSEL P 6/14
Should you have any questions, please contact me at the phone number or email address
provided below. Parties should not directly contact arbitrators under any circumstances,
Very truly yours,
William J. Cassidy/CC
William J. Cassidy
Senior Case Administrator
Phone: 561-416-0277
Fax; 301-527-4868.
FL-Main@finra.org
WJC:cel: LCOSX
idr, 08/29/2012
Enclosure
RECIPIENTS:
Mark F. Raymond, Esq., PFS Investments Inc.
Broad and Cassel, 2 South Biscayne Boulevard, Miami, FL 331312013-06-04 16:25 y 1 >> BROAD AND CASSEL P 7/14
Award
FINRA Dispute Resolution
orem one — nveaon ~
in the Matter of the Arbitration Between:
Claimant Case Number; 12-00361
Bernetta DeShazior
VS,
Respo. its Hearing Site: Miarni, Florida
Lawrence Maurice Cook
PFS Investments, Inc.
Primerica, Inc.
Nature of the Dispute: Customer vs. Associated Person, Member, and Non-Member
The case proceeded under the Optional All Public Panel Rule/All Public Panel
REPRESENTATION OF PARTIES
For Claimant Bernetta DeShazior: Frank R. Rodriguez, Esq. and Paulino A. Nufiez,
Esq., Rodriguez Tramont Guerra & Nufiez, P.A,, Coral Gables, Florida,
For Respondents Lawrence Maurice Cook (“Cook"), PFS Investments Inc. (“PFS”) and
Primerica, Inc, (‘Primerica’): Richard L. Martens, Esq., Ciktin Lubitz Martens &
O'Connell, West Palm Beach, Florida and Mark F. Raymond, Esq., Broad and Cassel,
Miami, Florida.
CASE INFORMATIO!
Statement of Claim filed on or about: February 1, 2012.
Bernetta DeShazior signed the Submission Agreement; February 1, 2012,
Statement of Answer filed by Respondents Cook and PFS on or about: April 17, 2012.
Lawrence Maurice Cook signed the Submission Agreement: April 22, 2013.
PFS Investments, Inc. signed the Submission Agreement: September 18, 2012.
Primerica, Inc. did not file a Statement of Answer or sign the Submission Agreement.
CASE SUMMARY
Claimant asserted the following causes of action: constructive fraud; breach of fiduciary
duty; unsuitable advice; negligence; negligent misrepresentation; fraud; and failure to
supervise. The causes of action relate to Claimant's irrevocable election to give up her
guaranteed, publicly funded defined benefit pension, the “FRS Pension Plan," and to
take a lump sum payment and convert her retirement plan to a defined contribution
investment plan, the "FRS Investment Plan.”2013-06-04 16:26 y 1 >> BROAD AND CASSEL P 8/14
FINRA Dispute Resolution
Arbitration No. 12-00361
Award Page 2 of §
Unless specifically admitted in their Answer, Respondents Cook and PFS denied the
allegations made in the Statement of Claim and asserted various affirmative defenses.
RELIEF REQUESTED
In the Statement of Claim, Claimant requested compensatory damages in excess of
$900,000.00, interest, costs and such other and further relief as deemed just and proper
by the undersigned arbitrators (“Panel”).
At the close of the hearing, Claimant requested compensatory damages of
$733,056.00, expert costs of $33,051.00, damages and costs of $766,107.00 and
punitive damages of $733,056.00.
Respondents Cook and PFS requested dismissal of the Statement of Claim with
prejudice, attorneys’ fees, costs, that all forum fees be assessed against Claimant and
such further relief as the Panel deemed just and proper.
At the close of the hearing, Respondent Cook requested expungement.
OTHER ISSUES CONSIDERED AND DECIDED
The Arbitrators acknowledge that they have each read the pleadings and other
materials filed by the parties.
On or about April 17, 2012, prior to the filing of a Statement of Answer or Submission
Agreement by Respondent Primerica, Claimant dismissed her claims against
Respondent Primerica, without prejudice. Respondent Primerica consented to the
dismissal, without prejudice.
During the evidentiary hearing, Respondent PFS made an ore tenus Motion to Dismiss
and asserted, among other things, that it did not sell Claimant a security. Claimant
Opposed the motion and asserted, among other things, that the transaction at issue did
involve the sale of a security. The Panel denied the motion.
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 the post-hearing submissions (if any), the Panel has decided in full and final
resolution of the issues submitted for determination as follows:
Respondent PFS is liable and shall pay to Claimant compensatory damages in the sum
of $187,500.00.
Claimants’ claims against Respondent Cook are denied in their entirety.2013-06-04 16:26 y 1 >> BROAD AND CASSEL P 9/14
FINRA Dispute Resolution
Arbitration No. 12-00361
Award Page 3 of §
Respondent Cook's request for expungement is denied.
Any and all claims for relief not specifically addressed herein, including Claimant's
tequest for punitive damages and Respondents Cook and PFS's request for attorneys’
fees, are denied,
FEES
Pursuant to the Code of Arbitration Procedure, the following fees are assessed:
Filing Fees
FINRA Dispute Resolution assessed a filing fee* for each claim:
Initial Claim Filing fee = $ 1,575.00
"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, Respondent PFS is assessed the
following:
Member Surcharge = $ 2,250.00
Pre-Hearing Processing Fee =$ 750.00
Hearing Processing Fee = $ 4,000.00
Discovery-Related Motion Fees
Fees apply for each decision rendered on a discovery-related motion.
Two (2) Decisions on discovery-related motions on the papers
with one (1) arbitrator @ $200.00/decision =$ 400.00
Claimant submitted one (1) discovery-related motion
Respondents Cook and PFS submitted ane (1) discovery-related motion
Total Discovery-Related Motion Fees =$ 400.00
The Panel has assessed $200.00 of the discovery-related motion fees to Claimant.
The Panel has assessed $200.00 of the discovery-related motion fees jointly and
severally to Respondents Cook and PFS.
Contested Motion for Issuance of a Subpoena Fees
Fees apply for each decision on a contested motion for the issuance of a subpoena.
One (1) Decision on a contested motion for the issuance of a subpoena
with one (1) arbitrator @ $200.00 =$ 200.00
Total Contested Motion for Issuance of a Subpoena Fees =$ 200.002013-06-04 16:26 y 1 >> BROAD AND CASSEL P 10/14
. + FINRA Dispute Resolution
Arbitration No. 12-00361
A 4of§
The Panel has assessed $100.00 of the contested motion for issuance of a subpoena
fee to Claimant.
The Panel has assessed $100.00 of the contested motion for issuance of a subpoena
fee jointly and severally to Respondents Cook and PFS.
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:
Three (3) Pre-hearing sessions with a single arbitrator @ $450.00/session = $ 1,350.00
Pre-hearing conferences: September 18,2012 1 session
October 10, 2012 1 session
April 4, 2013 1 session
Three (3) Pre-hearing sessions with the Panel @ $1,200.00/session = $ 3,600.00
Pre-hearing conferences: June 19, 2012 1 session
October 23, 2012 1 session
December 5, 2012 1 session
Twenty (20) Hearing sessions @ $1,200.00/session =$24,000.00
Hearing Dates: April 8, 2013 2 sessions
April 9, 2013 2 sessions
April 10, 2013 2 sessions
April 11, 2013 2 sessions
April 12, 2013 2 sessions
April 25, 2013 2 sessions
April 26, 2013 2 sessions
April 29, 2013 2 sessions
May 2, 2013 2 sessions
May 3, 2013 2 sessions
Total Hearing Session Fees =$28,950.00
The Panel has assessed $14,475.00 of the hearing session fees to Claimant.
The Panel has assessed $14,475.00 of the hearing session fees jointly and severally to
Respondents Cook and PFS.
All balances are payable to FINRA Dispute Resolution and are due upon receipt.2013-06-
04 16:27 y
FINRA Dispute Resolution
Arbitration No. 12-00361
Award Page 5 of 5
1 >> BROAD AND CASSEL P 11/14
ARBITRATION PANEL
Wiliam R. Alheim - Public Arbitrator, Presiding Chairperson
Thomas Czinner - Public Arbitrator
Paul Chernis - Public Arbitrator
1, the undersigned Arbitrator, do hereby affirm that! am the individual described herein
and who executed this instrument which is my award.
Concurring Arbitrators’ Si res
ist
William R. Alheim Signature Date
Public Arbitrator, Presiding Chairperson
is!
SE
Thomas Czinner Signature Date
Public Arbitrator
Ist
Paul Chernis Signature Date
Public Arbitrator
June 4, 2013
Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 12/14
FINRA Dispute Resolution
Arbitration No. 12.00381
Award Paga 5 of 5
ARBITRATION PANEL
wilam R, Alheim - Public Arbitrator, Presiding Chairperson
Thomas Czinner - Pubtic Arbitrator
Paul Chemis . Pubtle Arbitrator
|, the undersigned Arbitrator, do hereby affirm that | am the individual described herein
and who executed this Instrument which is my award.
Concurring Arbitrators’ Signatures
William R. Alhaim Signature Date
Public Arbitrator, Presiding Chaimperson
Thomas Czinner Signature Date
Public Arbitrator
Paul Chernis Signature Date
Public Arbitrator
Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 13/14
FINRA Dispute Resolution
Arbitration No. 12-00361
Award Page 5 of 5
ARBITRATION PANEL
Wiliam R. Alheirin . Public Arbitrator, Presiding Chairperson
Thomas Czinner - Public Arbitrator
Paul Chernis - Public Arbitrator
|, the undersigned Arbitrator, do hereby affirm that i am the individual described herein
and who executed this instrument which is my award.
Concurring Arbitrators! Si
William R. Alheim Signature Date
Public ArtatrstoF, Presiding Chairperson
ae 5730-22013,
mas Czinner Signature Date
Public Arbitrator
Paul Chernis Signature Date
Public Arbitrator
Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 14/14
FINRA Dispute Resolution
Arbitration No. 12-00361
Award Page 6 ofS
ARBITRATION PANEL
William R, Alhein - Public Arbitrator, Presiding Chaisperson
Thomas Czinner - Public Arbitrator
Paul Chemis - Public Arbitrator
1, the undersigned Arbitrator, do hereby affirm that | arm the individual described herein
and who executed this instrument which is my award.
Concurring Arbitrators’ Signatures,
Wiliam R. Alhein Signature Date
Public Arbitrator, Presiding Chairperson
Signature Date
b-3-\S
Signature Date
Public Arbitrator
Date of Service (For FINRA Dispute Resolution office use only)713/13 finra.complinet.comfenidisplayldsplay_main.himl?rbid=2403&element_id=41468prini=1
Finra?
12405. Disclosures Required of Arbitrators .
The Customer Code applies to claims filed on or after April 16, 2007. In addition, the list selection provisions of the
Customer Code apply to previously filed claims in which a list of arbitrators must be generated after April 16, 2007; in
these cases, however, the claim will continue to be governed by the remaining provisions of the old Code unless all
parties agree to proceed under the new Code.
(a) Before appointing arbitrators to a panel, the Director will notify the arbitrators of the nature of the dispute and the
identity of the parties. Each potential arbitrator must make a reasonable effort to learn of, and must disclose to the Director,
any circumstances which might preclude the arbitrator from rendering an objective and impartial determination in the
proceeding, including:
(1) Any direct or indirect financial or personal interest in the outcome of the arbitration;
(2) Any existing or past financial, business, professional, family, social, or other relationships or circumstances
with any party, any party's representative, or anyone who the arbitrator is told maybe a witness in the proceeding, that
are likely to affect impartiality or might reasonably create an appearance of partiality or bias;
(3) Any such relationship or circumstances involving members of the arbitrator's family or the arbitrator's current
employers, partners, or business associates; and
(4) Any existing or past service as a mediator for any of the parties in the case for which the arbitrator has been
selected.
(b) The obligation to disclose interests, relationships, or circumstances that might preclude an arbitrator from
rendering an objective and impartial determination described in paragraph (a) is a continuing duty that requires an arbitrator
who accepts appointment to an arbitration proceeding to disclose, at any stage of the proceeding, any such interests,
relationships, or circumstances that arise, or are recalled or discovered.
(c) The Director will inform the parties to the arbitration of any information disclosed to the Director under this rule
unless the arbitrator who disclosed the information declines appointment or voluntarily withdraws from the panel as soon as
the arbitrator learns of any interest, relationship or circumstance that might preclude the arbitrator from rendering an
objective and impartial determination in the proceeding, or the Director removes the arbitrator.
Amended by SR-FINRA-2010-053 eff. Feb. 1, 2011.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Adopted by SR-NASD-2003-158 eff. April 16, 2007.
Selected Notices: 07-07, 08-57, 11-05.
©2013 FINRA All rights reserved.
EXHIBIT
1 3
finra.complinet.conven/display'display_main.htmi?rbid= 24038element_id=4146&print=1 anmoCul VED
: . 4
Case Number: 12-00361 AY 23 ani
Arbitrator Name: Wiliam Alben 1S so fier.om
E fe)
ARBITRATOR R DISCLOSURE CHECKLIST.
The obligation to disclose interents, telationships, or circumstances that might preclude
am arbitrator from rendering. an objective and impartial determination is a continuing
duty. The duty requires an arbitrator who accepts appointment to an arbitration
proceeding to disclose, at any stage of the proceeding, any such interests,
relationships, or circumstances that arse or are Tecalied or discovered.
‘The Arbitrator Disclosure Checklist is sent to the arbitrators as part of the Oath of
Arbitrator. Jt not only provides a reminder to the arbitrators to consider all possible
disclosures, but also requires a complete explanation of any possible conflict to the
parties.
The questions on the Checklist are intended to help you comply with the disclosure
requirements as stated in FINRA Rule 12405 of the Customer Code and Rule 13405 of the
Industry Code (collectively referred to as Codes). These rules require arbitrators to disclose:
1. any direct or indirect financial or personal interest in the outcome of the arbitration;
2. any existing or past financial, business, professional, family, social, or other relationships
or circumstances with any party, any party's representative, or anyone who the arbitrator
is told may be a witness in the proceeding, that are likely to affect impartiality or might
reasonably create an appearance of partiality or bias;
3. any such relationship or circumstances involving members of the arbitrator's family or
the arbitrator's current employers, partners, or business associates; and
4. any existing or past service as a mediator for any of the parties in the case for which the
arbitrator was selected.
Please indicate your response to each of the questions listed below by checking the
appropriate box. Please check “yes” or “no” io each question. Provide a full explanation
to any question(s) ta which you provided a “yes” response. All affirmative responses and
explanations will be sent with the entire Checklist to the parties.
When completing the Checklist, it is essential to make a reasonable and good faith effort
to determine whether you have any relationships with the parties and/or attorneys in the
dispute and to make any necessary disclosures. In addition to relationships, itis
advisable to disclose any life experience that may raise any. doubt about your ability to
be impartial. Any doubts should be resolved in favor of making the disclosure.
EXHIBIT 3- Personal Disclosures YES. NO
In this.series of questions, we are seeking information about your personal and/or professional
relationships with any of the parties, counsel, or arbitrators in this arbitration, no matter how
- temote the relationship might seem.
1.
Have you had any professional, social, or other relationships or
interactions with counsel for any of the parties in this arbitration or their
law firms? [Cl] i
Have you had any professional, social, or other relationships or
interactions with any of the parties or their employers in the arbitration? [ ] [¥]
Have you had any professional, social, or other relationships or
interactions with any relative of any of the parties or counsel!
in the arbitration? C1 {xl
Have you had any professional, social, or other relationships or
interactions with any of the other arbitrators assigned to the arbitration? [ J] [¢]
_ Are-you presently serving as an arbitrator in another proceeding
involving any of the parties or counsel in this arbitration
or their-employers? {] [¥]
Financial’ Account Disclosures’
In this series of questions, we are seeking information about any financial relationships you may
have/had with any of the parties in this arbitration or their related entities.
6:
Have 'you, your spouse, or an immediate family member! maintained
a securities account (including accounts such as a 529 education ~
savings plan), whether individually, jointly or beneficially, with any
broker-dealer* named in the arbitration? Or with any broker-dealer
affilated with the firm or firms named in the arbitration? {17 ta
‘As defined in Rules 12100(u)(8) and 13100(u)(6) of the Codes, an immediate family member is:
A. aperson's parent, stepparent, child, or stepchild;
B. amember of a person's household;
C. an individual to whom a person provides financial support of more than 50 percent of the individual's
annual income; or
D. a person who is claimed as a dependent for federal income tax purposes.
To the extent you have knowledge, please also consider the employment, financial, and other interests of
your in-laws (mother, father, son, and daughter) when answering questions on this form referring to family
members. You are not required to seek out the information about your in-laws in responding to this form.
? A broker-dealer is a person or company that is in the business of buying and selling securities—stocks,
bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for
its own account (as dealer), or both. Individuals who work for broker-dealers—the sales personnel whom
Most people call brokers—are technically known as registered representatives.7...” Do you, your spouse, ofan immediate family member currently have
a non-securities related account (e.g., checking or savings accounts or
Joans) with a party.to this arbitration or with an entity: that is affiliated
with that party? For.example, in recent years some banks have
acquired broker-dealers and may be the Parent of of the broker-dealer
firm that isa party n this case. [1 04
Subject Matter Disclosures
In this series of questions, ‘we are seeking information about any experience (specific or
general) you may have/had with the subject matter of the arbitration:
8. Have you formed an opinion, positive or negative, about any of the
Parties, their counsel or the subject matter of the arbitration? [1] ty
9. A. Have you,’ your spouse, or an immediate family member invested in or
held any of the securities that are the subject of the arbitration? [-] [8]
B. To the extent you have knowledge, has ‘a close social acquaintance
or business associate invested in or held any of the securities that are
the subject of the arbitration? > (1. [4)
10. © A. Have you, your spouse, or an immediate family member been
involved in‘a dispute involving the same or similar subject matter
as the arbitration? t] €¥]
B. Did the dispute assert any of the same allegations as the .
assigned arbitration, even if the dispute was not securities-retated? [1] Ux]
c. To the extent you have knowledge, has a close 'social ©
acquaintance or business associate been involved in a dispute
involving the same or similar subject matter as the arbitration? [] -£€%)
D. Did the dispute assert any of the same allegations as the
assigned arbitration, even if the dispute was not securities-related? [ ] . [2]
Arbitrator Classification Disclosure
In this series of questions, we are seeking any facts or circumstances that may affect your
proper classification as either a public or non-public arbitrator.
11. Are you employed by, or the spouse or an immediate family member
of a person who is employed by, an entity that directly or indirectly
controls, is controlled by, or is under commen control with, any
partnership, corporation, or other organization that is engaged in
the securities business? [1 0442.
13.
14.
15.
16.
17,
Are you a director or officer of, or the spouse or an immediate
family member of a person who is a director or officer of, an entity
that directly or indirectly controls, is controlled by, or is under common
contro! with, any partnership, corporation, or other organization
that is engaged in the securities business? C1] Wl
This question is for Non-Public Arbitrators ONLY: If you are
classified as a non-public arbitrator and are no longer engaged in
the securities business, have you been out of the securities business
for five years or more? £11]
If you answered "yes" to question 14, are you receiving continuing
benefits (e.g., pension, health care, office space, administrative
services, etc.) from any of your former industry employers? ££.) £4]
Has your spouse or an immediate family member been employed
by a broker-dealer? If you answered “yes,” please provide the
dates of employment. {101
This guestion is for Public Arbitrators ONLY: Are you an attorney,
accountant, or other professional whose firm derived 10 percent or
more ofits annual revenue in either year of the past two years from
any persons or entities listed in Rule 12100(p)(1)-(4) or 13100(p)(1)- (4) £ J OX]
This question is for Public Arbitrators ONLY: Are you an attorney,
accountant, or other professional whose firm derived $50,000 or more
in annual revenue in either year of the past two years from professional
services rendered to any persons or entities listed in Rule 12100(p)(1)
or 13100(p)(1)* of the Codes relating to any customer disputes concerning
an investment account or transaction, including but not limited to, law
* Rules 12100(p)(1)-(4) and 13400(p)(1)-(4) define “non-public arbitrator” as a person who is otherwise
qualified to serve as an arbitrator and:
(1) is, or within the past five years, was:
A. associated with, including registered through, a broker or a dealer (including a government
securities broker or dealer or a municipal securities dealer);
B.. register
Preview
*** FILED: BROWARD COUNTY. FL HOWARD FORMAN, CLERK 7/3/2013 3:37:09 PM.**** Case Number: CACE-13-016070 Division: 25 tronically Filed 07/03/2013 03:37:11 PM ET. NW#ELI- 2276 IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT, IN AND FOR BROWARD COUNTY, FLORIDA PFS INVESTMENTS INC., a foreign corporation, and LAWRENCE MAURICE COOK, Petitioners, v. BERNETTA DESHAZIOR, Respondent. MSS SS SSS APPLICATION AND MOTION TO VACATE ARBITRATION AWARD Pursuant to the Federal Arbitration Act, 9 U.S.C. § 10 (“FAA”), and the Florida Arbitration Code, Fla. Stat. § 682.01 et seg., PFS Investments Inc. (“Primerica”) and Lawrence Maurice Cook respectfully bring this action to vacate an arbitration award (the “Award”) improperly issued by a panel of arbitrators in Bernetta DeShazior v. PFS Investments Inc. and Lawrence Maurice Cook, FINRA Case No. 12-00361 (the “Arbitration”). In support of their Application and Motion to vacate the Award, Petitioners state as follows: INTRODUCTION 1. This case arises out of an Arbitration conducted before the Financial Industry Regulatory Authority (“FINRA”). In that arbitration, the Claimant Bernetta DeShazior (“Deshazior”) complained that she was induced to make a supposedly “wrong choice” between two retirement plan options offered by her employer, Miami-Dade County Public Schools. DeShazior made that personal employee benefit choice after receiving substantial information and disclosures from the State of Florida in connection with her participation in the Florida Broad and Cassel 100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060 caseno, AS“ EO FOCIRetirement System (“FRS”). The FRS retirement benefits and programs are in no way affiliated with Petitioners Primerica or Cook. In fact, DeShazior was never a customer of Primerica or Cook for any of her FRS accounts and never invested any such retirement funds with Primerica. Nevertheless, she argued that her FRS benefit plan choice amounted to the sale of a security and that Primerica and Cook improperly caused her to choose the FRS Investment Plan option, thereby subjecting her to market risk. 2. Primerica and Cook defended these claims on various legal and factual grounds, including the facts that the FRS fully educates all public employees, including DeShazior, on their retirement plan options and there is no “wrong choice” among those alternative plans as designed and administered by the FRS. After the hearings, the arbitrators improperly issued an Award in favor of DeShazior and against Primerica in the amount of $187,500. However, at the same time, the arbitrators dismissed, with prejudice, all claims asserted by DeShazior against Cook — who acted only as Primerica’s representative. Thus, the Award reflects the incongruous and inconsistent result of holding the Primerica derivatively liable to DeShazior for the acts of its agent (Cook), while simultaneously finding no basis for any misconduct or liability by Cook to DeShazior. This inconsistency is sufficient to show that the Award was improperly entered and reflects bias against Primerica.! 3. Moreover, the Award against Primerica should be vacated by this Court because it teflects the actual existence of improper arbitrator bias, as well as a reasonable impression of ‘The Award expressly found no liability on the part of Respondent Cook and dismissed all claims against Cook, with prejudice. Thus, although the evident partiality and bias on the part of the Arbitrators resulted in an award against Respondent Primerica, it apparently did not result in any direct prejudice as to Respondent Cook. Accordingly, Petitioners Primerica and Cook jointly seek to vacate the Award entered against Primerica, and do not seek vacatur of the remaining portions of the Award reflecting dismissal of claims against Cook or assessment of hearing costs and fees among the parties. 2 Broad and Cassel 100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060bias, against Primerica. The bias of a single arbitrator on a three-person panel is sufficient to require vacatur of the Award. Even where the Award is unanimous, a single biased arbitrator can and will infect an entire panel of arbitrators, as occurred in this case. See Schmitz v. Zilveti, 20 F.3d 1043, 1049 (9th Cir. 1994). Here, the Award was improperly entered against Primerica and should be vacated for “evident partiality” on the part of the Arbitrators. As discussed more fully below, the apparent bias, or the reasonable impression of bias, of the arbitrators provides substantial grounds on which this Court should vacate the Award. See Commonwealth Coatings Corp. v. Cont. Cas. Co., 393 U.S. 145, 149 (1968). 2 4. First, Chairman William Alheim, failed to make any timely disclosure to Primerica that he, like Claimant DeShazior, is a participant in the FRS retirement program at issue in the Arbitration; has a direct personal financial relationship with the FRS; and, on information and belicf, he received similar FRS information and disclosures as Claimant DeShazior, which were the subject of the disputes in the Arbitration. Chairman Alheim also made his own personal choices about the FRS retirement programs at issue and may have formed opinions about which choices and options were appropriate. Chairman Alheim was required to disclose these important facts, including, but not limited to, his direct participation in the FRS program and his personal financial relationship with FRS prior to the commencement of the Arbitration hearings. Among other things, those matters reflect that Chairman Alheim had pre- conceived opinions and biases about the FRS programs and about the important issue of whether information provided by the FRS to plan participants, like DeShazior, was sufficient to cause them to make independent and informed decisions regarding their FRS plan options. Chairman 2 Petitioners intend to seek discovery in this proceeding and reserve their right to amend this Motion and to file a brief of points and authorities in support of vacatur. 3 Broad and Cassel 100 S.B. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060Alheim’s failure to disclose these facts constitutes “evident partiality” because it creates a reasonable impression of possible bias in the Arbitration. 5. Second, through various statements and actions during the hearings, Arbitrator Paul Chernis displayed evident and actual bias and partiality in favor of Claimant and against Primerica. The actual bias of Arbitrator Chernis manifested itself directly in the manner in which he conducted the Arbitration and in various comments made by Arbitrator Chernis during the proceedings. Instead of complying with FINRA rules and procedures demanding that arbitrators serve as neutrals and allow the parties and their counsel to try their own cases, Arbitrator Chemis engaged in unfair and aggressive questioning of witnesses, and effectively took the reins of the hearing from counsel in order to make points he perceived to benefit the Claimant’s case. In effect, Arbitrator Chernis became a partisan advocate for DeShazior and sought through his advocacy to persuade the other Arbitrators on the merits of her alleged claims, Arbitrator Chernis’s actual biases during the hearings are more than sufficient grounds for vacatur of the Award under Section 10(a)(2) of the FAA, as is his “misbehavior by which the rights of [Petitioners] have been prejudiced” under Section 10(a)(3).2 PARTIES, JURISDICTION, AND VENUE 6. Petitioner Primerica is a Georgia corporation with its principal place of business in Duluth, Georgia. * It appears that Arbitrator Chernis also used his influence on the other Arbitrators to inject into the Award an inaccurate statement regarding Petitioners’ motion to dismiss made during the hearings and to promote his incorrect interpretation on a key point of law. In particular, the Award includes a statement that Petitioners moved to dismiss the claims on the grounds that the FRS benefit choice did not involve any security and then states that such motion was denied by the Panel. In fact, no such motion to dismiss was made on the specific grounds stated in the Award. And, in any event, any such legal conclusion reflected in the award flatly contradicts the law, as provided by Petitioners to the Arbitrators during the hearings, including the holding of the United States Supreme Court and findings by the Securities and Exchange Commission that such employee benefit plans are not securities. 4 Broad and Cassel 100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.70607. Petitioner Lawrence Maurice Cook is a resident and citizen of the State of Florida. Cook has been a FINRA registered representative of PFSI since 2002. 8. DeShazior is a resident of Broward County, Florida and a citizen of the State of Florida. Jurisdiction is proper in this Court pursuant to § 682.18, Florida Statutes, and venue is proper in this Court pursuant to § 682.19, Florida Statutes, because Respondent is a resident of Broward County. 9. FINRA issued the defective Award of the Arbitrators on June 4, 2013, and accordingly this Motion is timely pursuant to § 682.13(2), Florida Statutes. A true and correct copy of the Arbitration Award is attached as Exhibit A. FACTUAL AND PROCEDURAL BACKGROUND 10. On or about February 1, 2012, DeShazior initiated the Arbitration by filing her Statement of Claim with FINRA against Petitioners. The Statement of Claim sets forth in detail DeShazior’s complaint about her participation in the FRS and her personal benefit choices made in connection with her FRS account, which was never held in any custody of Primerica. The Arbitration hearings were conducted in Miami, Florida over nine full days on April 8-12, 25, 26, and 29, and May 2-3, 2013. 11. Chairman Alheim violated his disclosure obligations under FINRA rules and showed his evident partiality in the matter by failing to make timely disclosures of important facts showing his own participation and personal opinions and financial interests in the FRS employee benefit programs, which lie at the heart of the disputes in this matter. FINRA rules, procedures and publications compel arbitrators to make on-the-record disclosures to the parties and as soon and as thoroughly as possible as to any such matters that could create any potential for bias. For example, in order to ensure arbitrator impartiality, FINRA requires every arbitrator, 5 Broad and Cassel 100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060including Chairman Alheim, to disclose “any circumstances which might preclude [him] from rendering an objective and impartial determination in the proceeding.” FINRA Rule 12405(a) (Copy attached as Exhibit B). 12. Disclosures made by arbitrators are critical to the arbitrator selection process. FINRA directs all arbitrators to perform conflict checks, read the statement of claim and answer, and complete Disclosure Checklists (which are supplied to the parties). (Copies of the arbitrator disclosures are attached as Exhibit C.) The Disclosure Checklist “not only provides a reminder to the arbitrators to consider all possible disclosures, but also requires a complete explanation of any possible conflict to the parties,” including affirmative responses to questions seeking potential conflicts. (Disclosure Checklist, at cover page, Ex. C.) 13. The Disclosure Checklist that Chairman Alheim completed contains numerous specific questions that must be answered accurately by every arbitrator, including: 8. Have you formed an opinion, positive or negative, about ... the subject matter of the arbitration? 9.A. Have you, your spouse, or an immediate family member invested in or held any of the securities that are the subject of the arbitration? (Ex. C, at p. 5.) Chairman Alheim incorrectly answered “no” to each of these questions. In fact, Chairman Alheim had an undisclosed direct personal financial interest and relationship with the FRS and, upon information and belief, had received the same or similar FRS information and disclosures as did DeShazior about the FRS programs and had pre-conceived opinions and beliefs about the sufficiency of the FRS information and materials and the propriety of his own FRS benefit plan choice. In essence, those prior, personal experiences of Chairman Alheim mirrored the claims asserted by DeShazior in this arbitration. 6 Broad and Cassel 100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.706014. If Chairman Alheim had adequately and timely disclosed his pre-existing opinions and beliefs and his personal participation and direct financial relationship with the FRS, then Petitioners would have had several options available to them. Petitioners could have (1) ranked Chairman Alheim differently during the initial arbitrator ranking process, (2) sought to remove Chairman Alheim from the arbitration panel for cause under FINRA Rule 12407, (3) asked Chairman Alheim directly to recuse himself under FINRA Rule 12406, (4) tailored their presentation of evidence and argument during the Arbitration to address the likely concerns of an arbitrator in Chairman Alheim’s position, or (5) accepted that Chairman Alheim had prejudged the matter against Petitioners, and settled the case. Chairman Alheim’s failure to disclose these important matters deprived Petitioners of the ability to act while in full possession of the facts.‘ 15. In addition, Arbitrator Chernis also failed to make proper disclosures of required information reflecting his own evident partiality against Primerica. For example, Arbitrator Chernis failed to fully disclose that he and/or his law firm previously represented several claimants who, like DeShazior, brought claims in arbitration against broker-dealer respondents, like Primerica. Similarly, Arbitrator Chernis also failed to properly disclose a lawsuit filed against himself and his law firm in 2001, which was further material information that should have been provided to Respondents. These failures by Arbitrator Chernis to properly disclose material information impacting his service in this arbitration provide further evidence of his bias against Primerica. (See Ex.C at 9). 16. | Chairman Alheim and Arbitrator Chernis demonstrated their evident partiality against Primerica and in favor of DeShazior by failing to make timely disclosures of important 4 As the FINRA rules make clear, such disclosures must be made prior to commencement of the arbitration hearings in order to allow the parties to effectively review and act upon that information. When such timely disclosures are not made, as in this case, then the parties face a Hobson’s Choice of raising those matters during the hearings and vety likely exacerbating the prejudice of the Arbitrators’ bias at the same time they are engaged in deciding the case. 7 Broad and Cassel 100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060and material information regarding their service as arbitrators in this case. These failures to meet the FINRA disclosure obligations create the reasonable impression of actual arbitrator bias and the requirement to vacate the Award against Primerica. 17. In addition, and as a separate and independent grounds for vacatur of the Award, during the evidentiary hearings, Arbitrator Chernis repeatedly evidenced his actual bias against Primerica and engaged in misconduct by taking over the evidentiary hearing and, like DeShazior’s own counsel, served as an advocate for the Claimant by engaging in unfair and misleading examinations of witnesses and by misinterpreting the evidentiary record for the benefit of DeShazior. Arbitrator Chernis was actively engaged in the presentation of the Claimant’s case and sought to affirmatively enhance and support the arguments made by DeShazior’s own lawyers. At times, Arbitrator Chernis so aggressively misstated the evidence in favor of DeShazior that her own lawyers were forced to acknowledge the overstatements by Arbitrator Chernis. 18. Among many other things, Arbitrator Chernis showed his evident partiality for the Claimant by asking favorable, leading questions of DeShazior’s witnesses, which were clearly designed to elicit answers that would support DeShazior’s claims. These efforts by Arbitrator Chernis seemed not just to support the Claimant’s case, but to enhance and expand the arguments for DeShazior, even when they were contrary to other facts reflected clearly by the evidence. In contrast, Arbitrator Chernis repeatedly asked hostile and argumentative questions directed to Petitioners’ witnesses in efforts to criticize or undermine the positions taken in defense of the arbitration claims. 19, During the Arbitration hearings, Arbitrator Chernis repeatedly displayed actual bias under Section 10(a)(2) of the FAA and committed “misbehavior by which the rights of 8 Broad and Cassel 100 S.E. 3" Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.7060[Petitioners] have been prejudiced” under Section 10(a)(3), each of which provides an independent basis for vacatur of the Award against Primerica. Likewise, the inclusion in the Award of an incorrect statement of law on whether the employee benefit program choice could be a security further reflects the actual bias of Arbitrator Chernis against Primerica. CONCLUSION 20. For the reasons set forth above, Petitioners respectfully request that this Court vacate the Award in the amount of $187,500 against Primerica and remand this matter to FINRA for a new arbitration on DeShazior’s alleged claims against Primerica before a different and impartial panel of arbitrators. Dated this 3" day of July, 2013. Respectfully submitted, lam G. Rabinowitz, P.A. lorida Bar No. 177962 ARabinowitz@BroadandCassel.com sbrown@broadandcassel.com Mark F. Raymond, P.A. Florida Bar No. 373397 MRaymond@BroadandCassel.com ssmith@broadandcassel.com 100 S.E. 3" Ave, Suite 2700 Fort Lauderdale, Florida 33394-0002 Tel: 954.764.7060 Jae Fax: 954.713.0981 Counsel for PFS Investments Inc, and Lawrence Cook 4847-4801-51242 9 Broad and Cassel 100 S.E. 3 Ave., Suite 2700, Fort Lauderdale, Florida 33394-0002, Tel: 954.764.70602013-06-04 16:24 y 1 >> BROAD AND CASSEL P 1/14 FINRA Dispute Resolution Southeast Processing Center Boca Center Tower 1 §200 Town Center Circle 4 Boca Raton, FL 33486 Email:FL-Main@finra.org Fl n fa Phone: 561-416-0277 Fax: 301-527-4868 Number of Pages including the Cover Sheet: i Date: 06/04/2013 Case Number: —12-00361 Case Name: Bernetta DeShazior vs, PFS Investments, Inc. and Lawrence M. Cook To: Mark F. Raymond Phone: 305-373-9425 Fax: 305-995-6385 From: William Cassidy], Scnior Case Administrator Message: 1 A This facsimile transmission fs intended only for the addressee(s) showa above, It may contain information thal is privileged, confidential, or otherwise protected from disclosure. Any revicw, dissemination or use of this transmission or ils contents by persons other than addressce is strictly prohibited. If you have received this transmission in crror, please notify ux immediately by telephone at (he above number,2013-06-04 16:24 y 1 >> BROAD AND CASSEL P 2/14 Finra® Financlal Industry Regulatory Authority VIA FACSIMILE AND MAIL dune 4, 2013 Mark F, Raymond, Esq. Broad and Cassel 2 South Biscayne Boulevard Miami, FL 33131 Subject: FINRA Dispute Resolution Arbitration Number 12-00361 Bernetta DeShazior vs. PFS Investments, Inc. and Lawrence M. Cook Dear Mr. Raymond: Enclosed please find the decision reached by the arbitrators in the above-referenced matter. Responsibility to Pay Monetary Award FINRA rules provide that all monetary awards shalll be paid within 30 days of receipt unless a motion to vacate has been filed with a court of competent jurisdiction. An award shail bear interest from the date of the award: * If not paid within 30 days of receipt; «ifthe award is the subject of a motion to vacate which is denied; or * As specified by the panel in the award. Interest shall be assessed at the legal rate, if any, then prevailing in the state where the award was rendered, or at a rate set by the arbitrator(s), ‘xpedited Suspension Proceed jon-P: nt of Award: Article VI, Section 3 of the FINRA By-Laws and FINRA Rule 9554 permit FINRA to suspend or cancel the registration of any firm or associated person that fails to comply with a FINRA arbitration award, Firms are required to notify FINRA in writing within 30 days of receipt of an award that they or their associated persons have paid or otherwise complied with the award, or to identify a valid basis for non-payment. We also request that prevailing claimants notify us in writing when their awards have not been paid within 30 days of receipt of the award. Written notification concerning award compliance or lack thereof should be directed to: David Carey Investor protection, Market Integrity, Dispute Resolution Bota Center Tower 1 1 $63 416 0277 Southeast Repjonal Office 5200 town Center Circle ¥ 303 527 4868 Suite 200 wwweéinna.or Boca Raton, FL F2496-10152013-06-04 16:24 y 4 >> BROAD AND CASSEL P 3/14 FINRA Dispute Resolution One Liberty Plaza, 165 Broadway, 52nd Floor New York, NY 10006 212-858-4333 (tel) | 301-527-4706 (fax) | david.carey@finra.org (email) Right to File Motion to Vacate Award FINRA rules provide that, unless the applicable law directs otherwise, all awards rendered are final and are not subject to review or appeal, Accordingly, FINRA has no authority to vacate this award. Any party wishing to challenge the award must make a motion to vacate the award ina federal or state court of appropriate jurisdiction pursuant to the Federal Arbitration Act, 9 U.S.C. § 40, or applicable state statute. There are limited grounds for vacating an arbitration award, and a party must bring a motion to vacate within the time period specified by the applicable statute. If you are not represented by counsel and wish to challenge the award, we urge you to seek legal advice regarding any rights or remedies available to you, Forum Fees You will receive under separate cover an invoice that reflects the fees assessed and any outstanding balance or refund due. Fees are due and payable to FINRA Dispute Resolution upon receipt of the invoice and should be sent to the address specified on the invoice. Any applicable refunds will also be sent under separate cover approximately 45 days after the case closes. All questions regarding payment of fees and refunds should be directed to FINRA Finance at (240) 386-5910. Arbitrator Evaluation FINRA encourages parties to complete Arbitrator Evaluation Forms at the conclusion of every ¢ase, We will utilize your comments in our ongoing efforts to evaluate and imprave the services our forum provides. You can complete the Arbitrator Evaluation Form on our website at www.finra.org/arbevaluation, Party Submissions to Arbitrators After a Case Closes FINRA rules provide that parties may not submit documents to arbitrators in cases that have been closed except under the following limited circumstances: 1) as ordered by a court; 2) at the request of any party within 10 days of service of an award, for typographical or computational errors, or mistakes in the description of any person or property referred to in the award; or 3) if all parties agree and submit documents within 10 days of service of an award, Any documents, if submitted, must be sent through FINRA.2013-06-04 16:25 y 1 >> BROAD AND CASSEL P 4/14 Questions Conceming Award Should you have any questions, please contact me at the phone number or email address provided below. Parties should not directly contact arbitrators under any circumstances. Very truly yours, Wiliam J. Cassidy/CC Williarn J, Cassidy Senior Case Administrator Phone; 561-416-0277 Fax: 301-527-4868 FL-Main@finra.org WJC:ecl:LCOSA idr: 08/29/2012 Enclosure RECIPIENTS: Richard L. Martens, Esq., Lawrence Maurice Cook Ciklin Lubitz Martens & O'Connell, 515 North Flagler Drive, 20th Floor, West Palm Beach, FL 33401 Mark F. Raymond, Esq., PFS Investments Inc. Broad and Cassel, 2 South Biscayne Boulevard, Miami, FL 33131 Andrew V. Tramont, Esq., Bernetta DeShazior Tramont Guerra & Nunez, P.A,, Alhambra International Genter, 255 Alhambra Circle, Suite 1150, Coral Gables, FL 331342013-06-04 16:25 y 1 >> BROAD AND CASSEL P 5/14 FINfa Financial industry Regulatory Authority VIA FACSIMILE AND MAIL dune 4, 2013 Mark F, Raymond, Esq, Broad and Cassel 2 South Biscayne Boulevard Miami, FL 33134 Subject. FINRA Dispute Resolution Arbitration Number 12-00361 Bernetta DeShazior vs. PFS Investments, inc. and Lawrence M. Cook Dear Mr, Raymond: Enclosed please find the decision reached by the arbitrators in the above-referenced matter. FINRA rules provide that all monetary awards shall be paid within 30 days of receipt unless a motion to vacate has been filed with a court of competent jurisdiction. An award shall accrue interest from the date of the award: * If not paid within 30 days of receipt; * If the award is the subject of a motion to vacate which is denied; or * As-specified by the panel in the award. Interest shall be assessed at the legal rate, if any, then prevailing in the state where the award was rendered, or at a rate set by the arbitrators. Firms are required to notify FINRA in writing within 30 days of receipt of an award that they or their associated persons have paid or otherwise complied with the award, or to identify a valid basis for non-payment, The 30-day period ends on: July 5, 2013. Associated persons who have changed employment since the arbitration claim was filed are required to notify FINRA directly regarding the payment status of any awards against them. Please review Notice to Members 00-55 for more information on the notification requirement and the sanctions for noncompliance. Written notification concerning award compliance or lack thereof should be directed to: David Carey FINRA Dispute Resolution One Liberty Plaza, 165 Broadway, 52nd Floor New York, NY 10006 212-858-4333 (tel) | 301-527-4706 (fax) | david.carey@finra.org (email) Investor protection, Market Integrity. Dispute Resolution Bows Center Tower 1 t 5614160277 Southeast Regional Office 5200 Town Center Circle f 3015274868 ‘Suite 200 www finra.orp, Bora Raton, H 33486-1015,2013-06-04 16:25 y 1 >> BROAD AND CASSEL P 6/14 Should you have any questions, please contact me at the phone number or email address provided below. Parties should not directly contact arbitrators under any circumstances, Very truly yours, William J. Cassidy/CC William J. Cassidy Senior Case Administrator Phone: 561-416-0277 Fax; 301-527-4868. FL-Main@finra.org WJC:cel: LCOSX idr, 08/29/2012 Enclosure RECIPIENTS: Mark F. Raymond, Esq., PFS Investments Inc. Broad and Cassel, 2 South Biscayne Boulevard, Miami, FL 331312013-06-04 16:25 y 1 >> BROAD AND CASSEL P 7/14 Award FINRA Dispute Resolution orem one — nveaon ~ in the Matter of the Arbitration Between: Claimant Case Number; 12-00361 Bernetta DeShazior VS, Respo. its Hearing Site: Miarni, Florida Lawrence Maurice Cook PFS Investments, Inc. Primerica, Inc. Nature of the Dispute: Customer vs. Associated Person, Member, and Non-Member The case proceeded under the Optional All Public Panel Rule/All Public Panel REPRESENTATION OF PARTIES For Claimant Bernetta DeShazior: Frank R. Rodriguez, Esq. and Paulino A. Nufiez, Esq., Rodriguez Tramont Guerra & Nufiez, P.A,, Coral Gables, Florida, For Respondents Lawrence Maurice Cook (“Cook"), PFS Investments Inc. (“PFS”) and Primerica, Inc, (‘Primerica’): Richard L. Martens, Esq., Ciktin Lubitz Martens & O'Connell, West Palm Beach, Florida and Mark F. Raymond, Esq., Broad and Cassel, Miami, Florida. CASE INFORMATIO! Statement of Claim filed on or about: February 1, 2012. Bernetta DeShazior signed the Submission Agreement; February 1, 2012, Statement of Answer filed by Respondents Cook and PFS on or about: April 17, 2012. Lawrence Maurice Cook signed the Submission Agreement: April 22, 2013. PFS Investments, Inc. signed the Submission Agreement: September 18, 2012. Primerica, Inc. did not file a Statement of Answer or sign the Submission Agreement. CASE SUMMARY Claimant asserted the following causes of action: constructive fraud; breach of fiduciary duty; unsuitable advice; negligence; negligent misrepresentation; fraud; and failure to supervise. The causes of action relate to Claimant's irrevocable election to give up her guaranteed, publicly funded defined benefit pension, the “FRS Pension Plan," and to take a lump sum payment and convert her retirement plan to a defined contribution investment plan, the "FRS Investment Plan.”2013-06-04 16:26 y 1 >> BROAD AND CASSEL P 8/14 FINRA Dispute Resolution Arbitration No. 12-00361 Award Page 2 of § Unless specifically admitted in their Answer, Respondents Cook and PFS denied the allegations made in the Statement of Claim and asserted various affirmative defenses. RELIEF REQUESTED In the Statement of Claim, Claimant requested compensatory damages in excess of $900,000.00, interest, costs and such other and further relief as deemed just and proper by the undersigned arbitrators (“Panel”). At the close of the hearing, Claimant requested compensatory damages of $733,056.00, expert costs of $33,051.00, damages and costs of $766,107.00 and punitive damages of $733,056.00. Respondents Cook and PFS requested dismissal of the Statement of Claim with prejudice, attorneys’ fees, costs, that all forum fees be assessed against Claimant and such further relief as the Panel deemed just and proper. At the close of the hearing, Respondent Cook requested expungement. OTHER ISSUES CONSIDERED AND DECIDED The Arbitrators acknowledge that they have each read the pleadings and other materials filed by the parties. On or about April 17, 2012, prior to the filing of a Statement of Answer or Submission Agreement by Respondent Primerica, Claimant dismissed her claims against Respondent Primerica, without prejudice. Respondent Primerica consented to the dismissal, without prejudice. During the evidentiary hearing, Respondent PFS made an ore tenus Motion to Dismiss and asserted, among other things, that it did not sell Claimant a security. Claimant Opposed the motion and asserted, among other things, that the transaction at issue did involve the sale of a security. The Panel denied the motion. 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 the post-hearing submissions (if any), the Panel has decided in full and final resolution of the issues submitted for determination as follows: Respondent PFS is liable and shall pay to Claimant compensatory damages in the sum of $187,500.00. Claimants’ claims against Respondent Cook are denied in their entirety.2013-06-04 16:26 y 1 >> BROAD AND CASSEL P 9/14 FINRA Dispute Resolution Arbitration No. 12-00361 Award Page 3 of § Respondent Cook's request for expungement is denied. Any and all claims for relief not specifically addressed herein, including Claimant's tequest for punitive damages and Respondents Cook and PFS's request for attorneys’ fees, are denied, FEES Pursuant to the Code of Arbitration Procedure, the following fees are assessed: Filing Fees FINRA Dispute Resolution assessed a filing fee* for each claim: Initial Claim Filing fee = $ 1,575.00 "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, Respondent PFS is assessed the following: Member Surcharge = $ 2,250.00 Pre-Hearing Processing Fee =$ 750.00 Hearing Processing Fee = $ 4,000.00 Discovery-Related Motion Fees Fees apply for each decision rendered on a discovery-related motion. Two (2) Decisions on discovery-related motions on the papers with one (1) arbitrator @ $200.00/decision =$ 400.00 Claimant submitted one (1) discovery-related motion Respondents Cook and PFS submitted ane (1) discovery-related motion Total Discovery-Related Motion Fees =$ 400.00 The Panel has assessed $200.00 of the discovery-related motion fees to Claimant. The Panel has assessed $200.00 of the discovery-related motion fees jointly and severally to Respondents Cook and PFS. Contested Motion for Issuance of a Subpoena Fees Fees apply for each decision on a contested motion for the issuance of a subpoena. One (1) Decision on a contested motion for the issuance of a subpoena with one (1) arbitrator @ $200.00 =$ 200.00 Total Contested Motion for Issuance of a Subpoena Fees =$ 200.002013-06-04 16:26 y 1 >> BROAD AND CASSEL P 10/14 . + FINRA Dispute Resolution Arbitration No. 12-00361 A 4of§ The Panel has assessed $100.00 of the contested motion for issuance of a subpoena fee to Claimant. The Panel has assessed $100.00 of the contested motion for issuance of a subpoena fee jointly and severally to Respondents Cook and PFS. 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: Three (3) Pre-hearing sessions with a single arbitrator @ $450.00/session = $ 1,350.00 Pre-hearing conferences: September 18,2012 1 session October 10, 2012 1 session April 4, 2013 1 session Three (3) Pre-hearing sessions with the Panel @ $1,200.00/session = $ 3,600.00 Pre-hearing conferences: June 19, 2012 1 session October 23, 2012 1 session December 5, 2012 1 session Twenty (20) Hearing sessions @ $1,200.00/session =$24,000.00 Hearing Dates: April 8, 2013 2 sessions April 9, 2013 2 sessions April 10, 2013 2 sessions April 11, 2013 2 sessions April 12, 2013 2 sessions April 25, 2013 2 sessions April 26, 2013 2 sessions April 29, 2013 2 sessions May 2, 2013 2 sessions May 3, 2013 2 sessions Total Hearing Session Fees =$28,950.00 The Panel has assessed $14,475.00 of the hearing session fees to Claimant. The Panel has assessed $14,475.00 of the hearing session fees jointly and severally to Respondents Cook and PFS. All balances are payable to FINRA Dispute Resolution and are due upon receipt.2013-06- 04 16:27 y FINRA Dispute Resolution Arbitration No. 12-00361 Award Page 5 of 5 1 >> BROAD AND CASSEL P 11/14 ARBITRATION PANEL Wiliam R. Alheim - Public Arbitrator, Presiding Chairperson Thomas Czinner - Public Arbitrator Paul Chernis - Public Arbitrator 1, the undersigned Arbitrator, do hereby affirm that! am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators’ Si res ist William R. Alheim Signature Date Public Arbitrator, Presiding Chairperson is! SE Thomas Czinner Signature Date Public Arbitrator Ist Paul Chernis Signature Date Public Arbitrator June 4, 2013 Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 12/14 FINRA Dispute Resolution Arbitration No. 12.00381 Award Paga 5 of 5 ARBITRATION PANEL wilam R, Alheim - Public Arbitrator, Presiding Chairperson Thomas Czinner - Pubtic Arbitrator Paul Chemis . Pubtle Arbitrator |, the undersigned Arbitrator, do hereby affirm that | am the individual described herein and who executed this Instrument which is my award. Concurring Arbitrators’ Signatures William R. Alhaim Signature Date Public Arbitrator, Presiding Chaimperson Thomas Czinner Signature Date Public Arbitrator Paul Chernis Signature Date Public Arbitrator Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 13/14 FINRA Dispute Resolution Arbitration No. 12-00361 Award Page 5 of 5 ARBITRATION PANEL Wiliam R. Alheirin . Public Arbitrator, Presiding Chairperson Thomas Czinner - Public Arbitrator Paul Chernis - Public Arbitrator |, the undersigned Arbitrator, do hereby affirm that i am the individual described herein and who executed this instrument which is my award. Concurring Arbitrators! Si William R. Alheim Signature Date Public ArtatrstoF, Presiding Chairperson ae 5730-22013, mas Czinner Signature Date Public Arbitrator Paul Chernis Signature Date Public Arbitrator Date of Service (For FINRA Dispute Resolution office use only)2013-06-04 16:27 y 1 >> BROAD AND CASSEL P 14/14 FINRA Dispute Resolution Arbitration No. 12-00361 Award Page 6 ofS ARBITRATION PANEL William R, Alhein - Public Arbitrator, Presiding Chaisperson Thomas Czinner - Public Arbitrator Paul Chemis - Public Arbitrator 1, the undersigned Arbitrator, do hereby affirm that | arm the individual described herein and who executed this instrument which is my award. Concurring Arbitrators’ Signatures, Wiliam R. Alhein Signature Date Public Arbitrator, Presiding Chairperson Signature Date b-3-\S Signature Date Public Arbitrator Date of Service (For FINRA Dispute Resolution office use only)713/13 finra.complinet.comfenidisplayldsplay_main.himl?rbid=2403&element_id=41468prini=1 Finra? 12405. Disclosures Required of Arbitrators . The Customer Code applies to claims filed on or after April 16, 2007. In addition, the list selection provisions of the Customer Code apply to previously filed claims in which a list of arbitrators must be generated after April 16, 2007; in these cases, however, the claim will continue to be governed by the remaining provisions of the old Code unless all parties agree to proceed under the new Code. (a) Before appointing arbitrators to a panel, the Director will notify the arbitrators of the nature of the dispute and the identity of the parties. Each potential arbitrator must make a reasonable effort to learn of, and must disclose to the Director, any circumstances which might preclude the arbitrator from rendering an objective and impartial determination in the proceeding, including: (1) Any direct or indirect financial or personal interest in the outcome of the arbitration; (2) Any existing or past financial, business, professional, family, social, or other relationships or circumstances with any party, any party's representative, or anyone who the arbitrator is told maybe a witness in the proceeding, that are likely to affect impartiality or might reasonably create an appearance of partiality or bias; (3) Any such relationship or circumstances involving members of the arbitrator's family or the arbitrator's current employers, partners, or business associates; and (4) Any existing or past service as a mediator for any of the parties in the case for which the arbitrator has been selected. (b) The obligation to disclose interests, relationships, or circumstances that might preclude an arbitrator from rendering an objective and impartial determination described in paragraph (a) is a continuing duty that requires an arbitrator who accepts appointment to an arbitration proceeding to disclose, at any stage of the proceeding, any such interests, relationships, or circumstances that arise, or are recalled or discovered. (c) The Director will inform the parties to the arbitration of any information disclosed to the Director under this rule unless the arbitrator who disclosed the information declines appointment or voluntarily withdraws from the panel as soon as the arbitrator learns of any interest, relationship or circumstance that might preclude the arbitrator from rendering an objective and impartial determination in the proceeding, or the Director removes the arbitrator. Amended by SR-FINRA-2010-053 eff. Feb. 1, 2011. Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008. Adopted by SR-NASD-2003-158 eff. April 16, 2007. Selected Notices: 07-07, 08-57, 11-05. ©2013 FINRA All rights reserved. EXHIBIT 1 3 finra.complinet.conven/display'display_main.htmi?rbid= 24038element_id=4146&print=1 anmoCul VED : . 4 Case Number: 12-00361 AY 23 ani Arbitrator Name: Wiliam Alben 1S so fier.om E fe) ARBITRATOR R DISCLOSURE CHECKLIST. The obligation to disclose interents, telationships, or circumstances that might preclude am arbitrator from rendering. an objective and impartial determination is a continuing duty. The duty requires an arbitrator who accepts appointment to an arbitration proceeding to disclose, at any stage of the proceeding, any such interests, relationships, or circumstances that arse or are Tecalied or discovered. ‘The Arbitrator Disclosure Checklist is sent to the arbitrators as part of the Oath of Arbitrator. Jt not only provides a reminder to the arbitrators to consider all possible disclosures, but also requires a complete explanation of any possible conflict to the parties. The questions on the Checklist are intended to help you comply with the disclosure requirements as stated in FINRA Rule 12405 of the Customer Code and Rule 13405 of the Industry Code (collectively referred to as Codes). These rules require arbitrators to disclose: 1. any direct or indirect financial or personal interest in the outcome of the arbitration; 2. any existing or past financial, business, professional, family, social, or other relationships or circumstances with any party, any party's representative, or anyone who the arbitrator is told may be a witness in the proceeding, that are likely to affect impartiality or might reasonably create an appearance of partiality or bias; 3. any such relationship or circumstances involving members of the arbitrator's family or the arbitrator's current employers, partners, or business associates; and 4. any existing or past service as a mediator for any of the parties in the case for which the arbitrator was selected. Please indicate your response to each of the questions listed below by checking the appropriate box. Please check “yes” or “no” io each question. Provide a full explanation to any question(s) ta which you provided a “yes” response. All affirmative responses and explanations will be sent with the entire Checklist to the parties. When completing the Checklist, it is essential to make a reasonable and good faith effort to determine whether you have any relationships with the parties and/or attorneys in the dispute and to make any necessary disclosures. In addition to relationships, itis advisable to disclose any life experience that may raise any. doubt about your ability to be impartial. Any doubts should be resolved in favor of making the disclosure. EXHIBIT 3- Personal Disclosures YES. NO In this.series of questions, we are seeking information about your personal and/or professional relationships with any of the parties, counsel, or arbitrators in this arbitration, no matter how - temote the relationship might seem. 1. Have you had any professional, social, or other relationships or interactions with counsel for any of the parties in this arbitration or their law firms? [Cl] i Have you had any professional, social, or other relationships or interactions with any of the parties or their employers in the arbitration? [ ] [¥] Have you had any professional, social, or other relationships or interactions with any relative of any of the parties or counsel! in the arbitration? C1 {xl Have you had any professional, social, or other relationships or interactions with any of the other arbitrators assigned to the arbitration? [ J] [¢] _ Are-you presently serving as an arbitrator in another proceeding involving any of the parties or counsel in this arbitration or their-employers? {] [¥] Financial’ Account Disclosures’ In this series of questions, we are seeking information about any financial relationships you may have/had with any of the parties in this arbitration or their related entities. 6: Have 'you, your spouse, or an immediate family member! maintained a securities account (including accounts such as a 529 education ~ savings plan), whether individually, jointly or beneficially, with any broker-dealer* named in the arbitration? Or with any broker-dealer affilated with the firm or firms named in the arbitration? {17 ta ‘As defined in Rules 12100(u)(8) and 13100(u)(6) of the Codes, an immediate family member is: A. aperson's parent, stepparent, child, or stepchild; B. amember of a person's household; C. an individual to whom a person provides financial support of more than 50 percent of the individual's annual income; or D. a person who is claimed as a dependent for federal income tax purposes. To the extent you have knowledge, please also consider the employment, financial, and other interests of your in-laws (mother, father, son, and daughter) when answering questions on this form referring to family members. You are not required to seek out the information about your in-laws in responding to this form. ? A broker-dealer is a person or company that is in the business of buying and selling securities—stocks, bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for its own account (as dealer), or both. Individuals who work for broker-dealers—the sales personnel whom Most people call brokers—are technically known as registered representatives.7...” Do you, your spouse, ofan immediate family member currently have a non-securities related account (e.g., checking or savings accounts or Joans) with a party.to this arbitration or with an entity: that is affiliated with that party? For.example, in recent years some banks have acquired broker-dealers and may be the Parent of of the broker-dealer firm that isa party n this case. [1 04 Subject Matter Disclosures In this series of questions, ‘we are seeking information about any experience (specific or general) you may have/had with the subject matter of the arbitration: 8. Have you formed an opinion, positive or negative, about any of the Parties, their counsel or the subject matter of the arbitration? [1] ty 9. A. Have you,’ your spouse, or an immediate family member invested in or held any of the securities that are the subject of the arbitration? [-] [8] B. To the extent you have knowledge, has ‘a close social acquaintance or business associate invested in or held any of the securities that are the subject of the arbitration? > (1. [4) 10. © A. Have you, your spouse, or an immediate family member been involved in‘a dispute involving the same or similar subject matter as the arbitration? t] €¥] B. Did the dispute assert any of the same allegations as the . assigned arbitration, even if the dispute was not securities-retated? [1] Ux] c. To the extent you have knowledge, has a close 'social © acquaintance or business associate been involved in a dispute involving the same or similar subject matter as the arbitration? [] -£€%) D. Did the dispute assert any of the same allegations as the assigned arbitration, even if the dispute was not securities-related? [ ] . [2] Arbitrator Classification Disclosure In this series of questions, we are seeking any facts or circumstances that may affect your proper classification as either a public or non-public arbitrator. 11. Are you employed by, or the spouse or an immediate family member of a person who is employed by, an entity that directly or indirectly controls, is controlled by, or is under commen control with, any partnership, corporation, or other organization that is engaged in the securities business? [1 0442. 13. 14. 15. 16. 17, Are you a director or officer of, or the spouse or an immediate family member of a person who is a director or officer of, an entity that directly or indirectly controls, is controlled by, or is under common contro! with, any partnership, corporation, or other organization that is engaged in the securities business? C1] Wl This question is for Non-Public Arbitrators ONLY: If you are classified as a non-public arbitrator and are no longer engaged in the securities business, have you been out of the securities business for five years or more? £11] If you answered "yes" to question 14, are you receiving continuing benefits (e.g., pension, health care, office space, administrative services, etc.) from any of your former industry employers? ££.) £4] Has your spouse or an immediate family member been employed by a broker-dealer? If you answered “yes,” please provide the dates of employment. {101 This guestion is for Public Arbitrators ONLY: Are you an attorney, accountant, or other professional whose firm derived 10 percent or more ofits annual revenue in either year of the past two years from any persons or entities listed in Rule 12100(p)(1)-(4) or 13100(p)(1)- (4) £ J OX] This question is for Public Arbitrators ONLY: Are you an attorney, accountant, or other professional whose firm derived $50,000 or more in annual revenue in either year of the past two years from professional services rendered to any persons or entities listed in Rule 12100(p)(1) or 13100(p)(1)* of the Codes relating to any customer disputes concerning an investment account or transaction, including but not limited to, law * Rules 12100(p)(1)-(4) and 13400(p)(1)-(4) define “non-public arbitrator” as a person who is otherwise qualified to serve as an arbitrator and: (1) is, or within the past five years, was: A. associated with, including registered through, a broker or a dealer (including a government securities broker or dealer or a municipal securities dealer); B.. register