Broker Sells Practice, Woos Back Clients, Loses Half-Million-Dollar Arbitration
A veteran independent broker in Ohio who wooed back some clients to his new firm after selling his practice has been ordered to pay $490,000 to the buyer.
Butler, who was affiliated with Ameriprise Financial when he bought the book, accused Wiggins of “systematically contacting and transferring…clients” to Cetera after learning that Butler was “reselling” his business to an unnamed third party, according to the arbitration award document.
The arbitrators awarded Butler $600,000 of the $975,000 of “actual damages” he requested for his lost business, but deducted $110,000 from the award because of the balance he owed Wiggins for purchase of his book. The book included about $60 million of customer accounts, Butler said in an interview.
“They understood that I bought it, I paid for it, and I had the ability to sell it without interruption,” said Butler, now a fee-only registered investment adviser in Independence, Ohio, with Mid Atlantic Financial Management.
As is customary, the arbitrators did not explain in the award document the reasons for their decision.
Wiggins, a 40-year industry veteran who was with Cetera predecessor First Allied Securities at the time he arranged the deal and who re-affiliated with Cetera after leaving Ameriprise in January 2017, did not return a call for comment. His Cleveland-based lawyer, Sean T. Needham, declined to comment.
In his complaint against Wiggins filed two years ago, Butler also named Cetera as a respondent. He dismissed his claims against the firm earlier this year, according to the award document. Butler declined to discuss why he dropped the firm, but said he had not reached a settlement with the independent broker-dealer.
Ameriprise cut its affiliation with Butler in January 2017, permitting him to resign after Finra had fined him $15,000 and suspended him for four months for violating company policy “related to selling away and disclosure of an outside activity,” according to a summary of his departure on BrokerCheck. The incident involved Butler’s failure to supervise an employee accused of stealing money from customers and from Butler’s outside business.
Butler began his brokerage career with Prudential Insurance in 1989 and was licensed at thee other independent broker-dealers before joining Ameriprise in 2010, according to his BrokerCheck history.
Wiggins became a registered rep in 1979, working over the subsequent 25 years at Merrill Lynch, UBS PaineWebber and Round Hill Securities. He joined First Allied in 2005 and shifted to Ameriprise in 2012, the year he sold his book to Butler, according to his BrokerCheck history.