Facts

Claimant Ken Sirls brought several claims against respondents Wachovia Securities LLC, Mark Schneider, and Randall Hunt regarding claimant's investments in a Ponzi scheme, run by Williams Sirls (Ken Sirls brother), a branch manager in Wachovia's Toledo, Ohio, office for part of the relevant period. Ken Sirls alleged a violation of NYSE Rule 345.17(a), breach of fiduciary duty, conversion, fraudulent concealment, breach of contract, common law fraud, violations of Sections 2110, 2120, 3010, and 3070 of the Conduct Rules of the NASD, and Respondeat superior. Wachovia counterclaimed against Ken Sirls, alleging fraudulent concealment, conspiracy, and equitable indemnity for Ken Sirls' alleged involvement in the Ponzi scheme run by William Sirls.

RESPONDENTS/COUNTER-CLAIMANTS' CONTENTIONS:
The respondents rejected the claimant's claims.

Damages

Sirls sought over $1.1 million in direct damages, over $200,000 for losses incurred after Sirls spent what he misguidedly thought he could afford, attorney fees, arbitration costs, interest, and punitive damages. Wachovia sought dismissal of the claim and compensation for the cost of defending claims relating to the Ponzi scheme run by William Sirls and allegedly facilitated by Ken Sirls. Schneider and Hunt sought dismissal and attorney fees. At the hearing's closing, claimant sought $1,737,629, Wachovia sought $100,000, and Schneider and Hunt sought $137,278.74.

Result

The arbitration panel denied both claims, by 2-1 decisions.

Other Information

ARBITRATORS: Allan H. Colman, Ivan Claman, Robert B. Hansohn. In July 2009, Wachovia was awarded $2,500 and Schneider and Hunt were awarded $1,250 each in discovery sanctions against Sirls.