Brokers, Clients Speak Out On Finra Complaints Over IRA Rollovers

‘Good Advice’

McCollam said that Lew, Beal and Holloway showed modest gain in their account, when the dividends from REITs are taken into account.

“We feel like we gave as good advice as we could have given,” McCollam said.

In 2010, Royal Alliance dismissed Tarr and McCollam, citing a failure to follow a policy for pre-approval of variable annuities, according to a FINRA filing.

“No client was adversely impacted by any omission by either Mr. McCollam or Ms. Tarr -- all transactions were ultimately reviewed and determined appropriate,” Linda Malamut, a Royal Alliance spokeswoman, said in a statement. “Further, the terminations were unrelated to any transaction by a client who filed a complaint with Royal Alliance.” Malamut declined to answer more detailed questions.

Tarr Dismissed

Before Tarr was fired, she said she had already left Royal Alliance to join a competitor because of frustration with the backlog in approving the annuities. Royal Alliance put a black mark on their record because the company was upset about losing their business, Tarr and McCollam said. Royal Alliance then contacted clients, sparking the flurry of arbitration complaints, which came after their dismissal, according to Tarr and McCollam.

As investments soured, 37 customers complained about Tarr to Finra, which logs disputes with brokers in public records. Fifteen of these complaints are pending, four were settled, and 18 were closed without action. The agency lists 11 complaints against McCollam. Eighty-eight percent of brokers do not have any complaints, disciplinary proceedings or other adverse actions listed with FINRA.

Brokerage customers typically sign a contract giving up their right to sue in court and requiring them to submit to Finra arbitration. These proceedings are generally confidential. Sommers said ten of his clients have filed arbitration claims against Royal Alliance, Tarr and McCollam, and he expects at least two more will too.

Lawsuit Filed

Last week, seven of Sommers’ clients, including Lew, filed suit against Royal Alliance in state court in Alameda County, California. The complaint alleges breach of fiduciary duty, fraud and failure to supervise its brokers, leading to more than $1 million in damages. The former employees were placed “in totally unsuitable investments” that were “designed to maximize the commissions and fees” paid to the company and the brokers, according to the lawsuit.

In 2012, arbitrators awarded three former AT&T employees a total of $1.4 million in damages and interest from Royal Alliance, according to a filing with a California court, where the company unsuccessfully appealed. Darlene Peterson, Karen LaBuda and Sherry Leach-Warth each worked at AT&T for more than 30 years.

McCollam and Tarr said they did not appear at the arbitration to defend themselves and that losses suffered by the three customers were modest.

Tarr, 61, is now working as president of AeroComputers Inc., an Oxnard, California aviation company catering to law enforcement. She took over from her brother-in-law, who died in January.

Tarr said she believed in the products she sold at Royal Alliance, but would have changed course if the brokerage had objected.

“Royal Alliance could have said to me five years ago, we’ve been looking through your book of business, we think you’re a little heavy on variable annuities, let me suggest alternatives,” Tarr said. “They never said anything. Nothing.”