A Finra arbitration panel has ordered National Planning Corporation to hand over $2.6 million to an 84-year-old woman who was sold fraudulent promissory notes.

Sandra Alford of St. Louis, in a September 2017 claim, accused National Planning of negligent misrepresentation, common law fraud, breach of contract and negligent supervision. She was a client of William Glaser, a former registered representative of the company.

Glaser, 61, of Ellisville, Mo., is serving 36 months in prison in a separate case where he admitted to misleading and defrauding clients by cashing out money from their retirement portfolios to fund investments with a business associate. He pleaded guilty to three counts of wire fraud on February 26, 2019, and appeared in U.S. District Court for sentencing.

Alford’s claim said that Glaser invested her assets in two fraudulent promissory notes and recommended other unsuitable investments, including non-traded real estate investment trusts and variable annuities, for the sole purpose of generating commissions and fees to his and the company’s benefit.

Richard Fosher, one of Alford’s attorneys, said what Glaser did to the elderly widow was egregious, and the panel agreed. He explained that it was after Glaser sold Alford non-traded REITs and other unsuitable investments that he began a pattern of switching in and out of annuities to generate money for himself. “He then sold her promissory notes in a private company that were worthless. The broker firm did not supervise him,” Fosher said.

According to the claim, National Planning denied the allegations and asserted various affirmative defenses.

National Planning, a former affiliate of Jackson National Life Insurance Company, was sold in 2017 to LPL Financial.

Alford had not sought punitive damages, but in addition to $1.58 million in compensatory damages and $45,830 in costs, the arbitration panel awarded her punitive damages of $1 million.

Fosher noted that the latter award demonstrated the panel's unanimous feeling that the underlying conduct by Glaser was egregious.

“We feel the panel got this one right. We are certainly happy for our client,” he said.