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FOX HEFTER WINS FINRA ARBITRATION HEARING

Dan Hefter recently represented five siblings who had been designated by their father as beneficiaries of two brokerage accounts the father held at Charles Schwab & Co. in an arbitration hearing against Schwab. Their father had designated his wife (not the mother of Fox Hefter’s clients) as beneficiary of 18% of the assets in his Schwab accounts, and had designated his children as beneficiaries of the remaining 82%. When the father/husband died, the wife claimed to be entitled to 50% of the assets in the accounts under Arizona community property law. Schwab honored the wife’s claim, and gave the wife 50% of the assets in the accounts. Fox Hefter sued Schwab on the theory that Schwab had breached its obligations to Fox Hefter’s clients because the great majority of the assets that Schwab gave to the wife were not community property, but rather were the separate property of the father/husband, and therefore should have been distributed in the proportions required by the father/husband’s account beneficiary designations. Schwab demanded arbitration pursuant to arbitration provisions in the account agreements that each of the plaintiffs had entered into with Schwab, and brought the wife into the case as a third-party respondent. The arbitration hearing was held in August, and on September 2, the panel awarded a total of $236,302.46 plus prejudgment interest and arbitration fees to Fox Hefter’s clients and against Schwab, and awarded the same amount to Schwab against the wife. Schwab was represented at the hearing by SNR Denton and an in-house attorney.