Facts

Claimant asserted causes of action including the following: misrepresentation, violation of the Know Your Customer Rule, suitability, breach of fair dealings with customers, failure to supervise, breach of fiduciary duty, and negligence. Claimant alleged that Mechtenberg misrepresented his risk tolerance, annual income and net worth in order to create a paper trail that would justify investing his disability retirement account balances in high-risk equity portfolios. Claimant alleged that Mechtenberg invested his assets from a retirement account into a Conseco Advantage annuity, which consisted of several high-risk funds, which, according to Claimant, was in contrast to his stated long-term financial objective of preservation of capital and an unsuitable investment. Claimant stated that because Multi-Financial, Geneos and Mechtenberg Financial had the duty to supervise Mechtenberg, they are directly liable for their failures to supervise her, and jointly and severally liable for MechtenbergÆs actions and omissions.

Respondent, Multi-Financial Securities Corporation, denied the allegations set forth in the Statement of Claim and asserted affirmative defenses including the following: Claimant failed to plead fraud with specificity; Claimant's claims are barred, on in the alternative limited, under the doctrines of comparative fault and comparative negligence; Claimant ratified the transactions at issue in the Statement of Claim; Claimant had actual knowledge of all relevant facts in investment risk and assumed any risk associated with the variable annuity investment; Claimant had constructive knowledge of all relevant facts and investment risk and assumed any risks associated with the variable annuity transaction; Multi-Financial, at all times, acted in good faith, exercised reasonable care in its dealing with Claimant and had reasonable grounds for believing Claimant's variable annuity transaction was suitable based upon Claimant's stated financial information and objectives; ClaimantÆs claims are barred by the doctrines of estoppel and waiver; there is no private right of action for violation of self-regulatory organization; and ClaimantÆs claims are barred by the applicable statutes of limitation.

Respondents, Geneos Wealth Management Inc., Dorothy Mechtenberg and Mechtenberg Financial Group, denied the allegations set forth in the Statement of Claim and asserted affirmative defenses including the following: the claim and each purported cause of action contained therein failed to allege facts sufficient to state a cause of action against Respondents; Claimant is estopped from asserting the allegations contained in the Statement of Claim, and in each and every alleged cause of action contained therein, by reason of the acts, omissions, representations and course of conduct of Claimant and/or his agents, upon which Respondents relied to their prejudice and detriment; Claimant and/or his agents have expressly and impliedly waived all claims arising from the allegations made in the Statement of Claim; the injuries, damages, and losses referred to in the Claim were proximately caused and contributed to by negligent misrepresentations, fraud, suppression, or other wrongful conduct on the part of Claimant and/or his agents herein; Claimant has lost any right to relief against Respondents through laches, which has resulted in substantial prejudice to Respondents; any damages, injuries or losses sustained by Claimant were caused by risks of which he was well aware of and understood and voluntarily assumed upon himself; Claimant and/or his agents have at all times ratified the acts and/or omissions of Respondents which were alleged in the Claim to have proximately caused injury to Claimant; Claimant and/or his agents have released Respondents from any liability and from all rights to recover as alleged in the Claim, and at all times alleged herein, Respondents acted in good faith and non-inducement.

Damages

Claimant requested an award of $311,932.90 in compensatory damages, plus lost opportunity damages, reimbursement of commission and fees paid to Mechtenberg, costs, attorney fees, punitive damages, and such other relief the Panel deemed appropriate. Respondent Multi-Financial Securities Corporation requested that the claims asserted against it be denied in their entirety and that it be awarded its costs and attorney fees. Respondents Geneos Wealth Management Inc., Dorothy Mechtenberg and Mechtenberg Financial Group, requested that the claims asserted against them be denied in their entirety and that they be awarded their costs and attorney fees.

Result

The Panel determined as follows: 1. Respondents Multi-Financial Securities Corporation, Dorothy Mechtenberg and Mechtenberg Financial Group Inc. are jointly and severally liable for and shall pay to Claimant David Cope $125,000.00 in compensatory damages. 2. Respondents, Multi-Financial Securities Corporation, Dorothy Mechtenberg and Mechtenberg Financial Group Inc. are jointly and severally liable for and shall pay to Claimant, David Cope, interest on the above stated sum in the amount of 8% per annum from and including thirty days after the date of this Award through and including the date this Award is paid in full. 3. To the extent not specifically awarded or otherwise provided for above, all other claims and request for relief by any party hereto, including punitive damages, are denied with prejudice; and 4. Other than the Forum Fees noted below, the parties shall each bear all other costs and expenses incurred by them in connection with this proceeding, including but not limited to attorney fees.

Other Information

On or about August 11, 2005, Claimant notified NASD Dispute Resolution that all claims asserted against Respondent Geneos Wealth Management Inc. were dismissed due to a confidential settlement reached by the parties. As such, the Panel did not adjudicate any claims asserted against Respondent Geneos Wealth Management.