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April 2018

Philadelphia Team Obtains Pre-Discovery Dismissal of All Claims in FINRA Arbitration Litigation

Gordon Rees Scully Mansukhani Philadelphia partner Alexander Nemiroff and associate H. Matthew Taylor received an award from the FINRA Office of Dispute Resolution granting their pre-discovery motion to dismiss, with prejudice, on behalf of the firm’s client, a prominent broker-dealer in the financial industry. 

The claimant asserted claims against the firm’s client for securities fraud under state and federal law, breach of contract, breach of fiduciary duty and negligence. The claimant alleged that the firm's client, along with its former registered representative, misled her into purchasing a variable life insurance policy back in early 2007. The claimant alleged that the variable life insurance policy subsequently lost value and failed to provide the guaranteed death benefit she had expected. The claimant filed her claim with FINRA in February 2017, nearly 10 years after she purchased the policy.

The firm argued that the claim was untimely per the FINRA six year eligibility rule, which requires all claims to be filed with FINRA within six years of “the occurrence or event giving rise to the claim.” The firm argued that the claimant’s arbitration claim began to accrue in 2007 when she purchased the variable life insurance policy. The firm also argued that the eligibility period was not a statute of limitations and as such, was not subject to the discovery rule or equitable tolling. Finally, the firm argued that, assuming arguendo the eligibility analysis could be tolled, the claimant had failed to assert any material fact in the relevant time frame which could be used to measure the six year eligibility period.

Following lengthy oral argument, the FINRA arbitration panel issued an order granting the firm’s arguments and dismissing the claimant’s statement of claim with prejudice. 

Alexander Nemiroff
H. Matthew Taylor