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DURING THE PERIOD 4/2000-5/2004 CLIENTS MAINTAINED 2 VARIABLE ANNUITIES AND ONE MANAGED ACCOUNT AND ALLEGE THE INVESTMENTS WERE UNSUITABLE.
Damage Amount Requested
$150,000.00
Settlement Amount
$50,000.00
Broker Comment
THE CLAIMANTS CAME TO US IN NOV 1999. THEY HAD ALL OF THEIR IRA MONEY INVESTED IN A VARIABLE ANNUITY. IT WAS DETERMINED THAT A REALLOCATION OF CURRENT ASSETS WOULD BE APPROPRIATE AND WE DID SO. THE FUNDS WERE INVESTED IN LATE SPRING 2000 NEAR THE HEIGHT OF THE MARKET. THE CLAIMANTS FILED A CLAIM IN 2005 IN AN EFFORT TO RECLAIM THEIR MARKET LOSSES FROM THE SEVERE DOWNTURN OF THE STOCK MARKET FROM 2000 THROUGH 2002. THE CLAIMANTS CONTENDED THAT WE HAD ALLOCATED THE ACCOUNTS TOO AGGRESSIVELY. WHEN ALLOCATING THE ACCOUNTS, WE CONSIDERED CDS THAT THE CLAIMANTS CURRENTLY HELD, INTO OUR ASSET ALLOCATION MODEL. BY CHOOSING TO IGNORE THE CD ASSETS (WHICH WE DID NOT MANAGE), THE CLAIMANTS MADE A CLAIM OF "UNSUITABILITY" DUE TO OVERLY AGGRESSIVE ALLOCATION OF ASSETS. WE DENIED THE CLAIM AS BASELESS, AND WE WERE SUBSEQUENTLY DISMISSED FROM THE ARBITRATION ON 9/15/2006. THE CASE WAS SETTLED BETWEEN CORNERSTONE INVESTMENTS AND THE CLAIMANTS. THE AMOUNT OF THE SETTLEMENT WAS (1) 2/3 LESS THAN ORIGINALLY DEMANDED BY THE CLAIMANTS AND (2) LESS THAN WHAT IT WOULD HAVE COST TO DEFEND THE CASE IN ARBITRATION.
12/11/1996
Regulatory
Final
Initiated By
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Monetary/Fine
Amount
$5,000.00
Sanctions
Censure
Broker Comment
WHILE ASSOCIATED WITH PRIMELINE, WE WERE QUITE ACTIVE IN REAL ESTATE ACTIVITIES WITH GENERAL PARTNER RESPONSIBILITIES FOR OVER 50 ENTITIES. IN OUR DAY TO DAY OPERATIONS WITH PRIMELINE SECURITIES, WE NEGLECTED SOMETIMES TO PUT THINGS IN WRITING. WE FELT WE HAD THE VERBAL APPROVAL OF PRIMELINE SECURITIES FOR THE PRIVATE SECURITIES TRANSACTION DESCRIBED ABOVE. WHEN WE WERE ADVISED BY PRIMELINE THAT IT DISAPPROVED OF THE SALES OF THUNDERBIRD IV, LP, WE CEASED ALL SELLING EFFORTS, AND RESCINDED THE SALE TO THE INSTITUTIONAL INVESTOR IN MARCH OF 1995. THE INSTITUTIONAL INVESTOR WAS
OFFERED A CASH RESCISSION IN THE AMOUNT OF $250,767 OR AN
OPPORTUNITY TO EXCHANGE ITS INTEREST FOR AN INTEREST IN ANOTHER PARTNERSHIP. THE INSTITUTIONAL INVESTOR CHOSE TO EXCHANGE ITS INTEREST. WE SUBSEQUENTLY RESIGNED FROM PRIMELINE AND FORMED OUR OWN BROKER DEALER SO AS NOT TO SUBJECT OURSELVES TO THIS TYPE OF SITUATION IN THE FUTURE.
Disclosures can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.
Disclosures can be customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings that they were a part of.