Woodbury to Pay $1.1 Million for Failing to Supervise Former Broker
Independent broker-dealer Woodbury Financial Services has been ordered to pay $1.1 million to a couple who invested in an aircraft company, a military building in Indiana, variable annuities, and A-share mutual funds, among other allegedly unsuitable investments.
In a decision posted late Thursday on Finra’s dispute resolution website, a three-person arbitration panel in San Diego found that Woodbury, a unit of the Advisor Group, “permitted the execution of unsuitable transactions as a result of its failure to discharge its duty to supervise” the former broker, Robert H. Hoffmann.
Kris and Sandy Dielman, the clients who brought the arbitration complaint in April 2017, also named the Indiana-based broker in their claim but proceedings against him were stayed after he filed for bankruptcy earlier this year, according to the award decision.
Hoffmann was barred from working as a broker by Finra in November 2017 after he refused to cooperate in its investigation of customer allegations of unsuitability, unauthorized transactions, excessive trading and private securities transactions, according to his BrokerCheck record. The advisor, who began his brokerage career in 1999 at Robert W. Baird, has a pending arbitration complaint filed in January 2017 seeking $3.2 million for suitability, unauthorized trading and churning, according to the database.
Gavin Gruber, a Portland, Oregon, lawyer who represented Hoffmann, did not respond to a request for comment.
Robert Traylor, a lawyer for the Dielmans, also did not respond to requests for comment on how they met Hoffmann or whether they are former San Diego Charger Pro Bowl lineman, Kris, and college all-star polo player, Sandy. A call left at San Diego Miramar College for a Sandy Dielman who is an assistant woman’s polo coach there, was not returned.
The arbitrators denied the Dielmans’ request for unspecified punitive damages and attorneys’ fees, but found Woodbury liable for $970,107 in compensatory damages and $121,468 of pre-judgment interest.
A spokeswoman for Woodbury said that as a matter of policy the firm does not comment on litigation.