Baird Advisors Win Expungement of Ex-Executive’s Unsuitability Claims
A pair of Robert W. Baird advisors successfully won expungement of a complaint from a former Johnson Controls executive and his wife that they were unsuitably sold 529 accounts for their adult children, variable annuities in IRAs and risky proprietary funds, according to a Finra arbitration award filing this week.Three public arbitrators unanimously ruled that customers Rande and Georgia Somma were sophisticated investors who received “extensive” oral and written reports about their investments over their 14-year relationship with Milwaukee-based Baird, and “never made any complaints until they filed this case” in November 2017, the document said.
The Sommas sought $2.86 million from Baird and longtime firm advisors Mark H. Falci and Patrick W. Powell, according to the August 7 award document. Baird paid $220,000 in a stipulated dismissal of the underlying complaint in January, and neither broker contributed to the settlement, according to the document and their BrokerCheck records.
Rande Somma, a Michigan-based former president of Johnson Controls’ automotive systems group who runs an eponymous coaching and development company, and his wife did not participate in the expungement hearing, the award document said. Few customers are willing to pay lawyers to oppose expungement after settlements are reached, according to lawyers in such cases.
The Sommas, who live in Michigan, could not be reached for comment, and their lawyer, Robert Sosin, did not respond to a request for comment.
Their allegations of unsuitability, excessive fees, distributions from their IRAs, secretive concealment and breach of fiduciary duties stemmed from mischaracterization of their risk tolerance and their placement in Baird Capital venture capital funds, managed accounts of Baird’s RiverFront Investment Group, Jackson National variable annuities in IRAs and 529 accounts “for adult children who had finished college and did not intend to enroll again,” according to the award document.
Alan Taylor, a Novi, Michigan-based lawyer who represented Baird and the brokers, confirmed the award and settlement terms but declined to comment further on the claims from the Sommas, pending discussion with Baird.
The Baird brokers, who have no other complaints on their records, did not return calls for comment left at Falci’s Milwaukee office and at Powell’s Racine office.
Falci, who has worked at Baird for all but seven months of his 21-year brokerage career, offered “special personal attention, reports, access to fund managers, investment counselors, customized periodic reporting, extensive oral and written communications and frequent face-to-face meetings” to the Sommas, the arbitrators wrote in explaining why the allegations against him were false.
Powell, who has worked at Baird for 23 of his 37 years as a registered representative, “never met or had any interactions with Claimants, so their allegations are not supported by the evidence,” the award document said.
The Sommas withdrew their claims against Falci and Powell in January, and the brokers filed their expungement requests in February.
Employment lawyers active in expungement cases have been urging advisors to file requests before tightened Finra rules aimed at protecting the public are approved by the Securities and Exchange Commission. The amended expungement rules were proposed 20 months ago.