Ameriprise Advisors Must Pay More Than $341,000 To Fidelity

Two advisors have been ordered to pay more than $341,000 to Fidelity after allegedly breaking a clearing contract when they left to join Amerprise.

Last week, a Finra arbitration panel ordered Frank Aguilar and Jason Garofalo, two Nevada-based advisors, and their former broker-dealer, TriCor Financial Services, to pay Fidelity’s National Financial Services $341,620 in damages.

In November 2015, Aguilar and Garofalo allegedly breached their contract with National Financial Services (NFS) by leaving their clearing and custody relationship early to join Ameriprise.

Founded in 2006 as a hybrid firm, TriCor established NFS as its sole clearing relationship shortly afterward. According to Finra’s BrokerCheck, Aguilar acted as president and managing member of TriCor, while Garofalo acted as director, each owning a small stake in the firm.

Aguilar and Garofalo appear to have left as of Feburary 2016, when TriCor was no longer registered with the SEC as an RIA nor with Finra as a broker-dealer.

In September 2016, NFS filed an arbitration claim accusing TriCor and its principles of failing to pay an early termination fee and otherwise breaching their clearing agreement.

Aguilar and Garofalo filed a motion to dismiss the NFS claims, arguing that TriCor, not themselves, was responsible for the breach of contract, but the arbitrators ruled that the advisors should be treated as if they were the “alter ego” of their broker-dealer.

The damages consist of a $45,000 credit line the advisors had with Fidelity and a $423,490 early termination fee minus the amount left in the advisors’ book of business. In addition, the respondents were assigned $8,437 of the $11,250 in fees for the arbitration sessions.

The arbitrators’ ruling is far from the TriCor advisors’ first brush with Finra. In 2015, TriCor was ordered to pay more than $184,000 in damages for alleged breach of fiduciary duty, among other charges, involving the sale of real estate investment trusts. In 2011, TriCor accepted a censure for failing to disclose change in ownership to Finra.