Principal Securities Inc. has prevailed in an arbitration claim brought by 49 investors and two trusts that sought $5 million from the Des Moines, Iowa-based firm for forcing the resignation of an advisor who had successfully managed their options portfolios.

While the firm notified the investors that their advisor, Joe Allen, had left the firm, the investors claimed that they “suffered catastrophic losses in their accounts because Principal forced their advisor to resign without creating a plan to handle the options strategies he created,” according to their claim.

But the three-person Finra arbitration panel denied the investors’ claim yesterday in its entirety.

Adam Gana, the attorney for all but two of the investors, said he did not agree with the ruling.

“We strongly disagree with the panel’s ultimately decision, but this was an incredibly novel and unique case involving a brief period of time. Overall, the clients had gains,” Gana, a partner at Gana Weinstein LLP in Chicago, told Financial Advisor. “We believe that if this case was tried again in front of a different panel we would prevail."

Principal Securities’ attorneys Peter Fruin and Katy Eldridge, both shareholders with law firm Maynard Cooper, did not immediately respond to a request for comment.

Many of the 49 investors followed Allen to his new firm, but there were three months before he landed at a new broker-dealer when their options portfolio degraded, the claim argued.

In the investors’ original arbitration claim filed September 29, 2019, they asserted that Principal was guilty of negligence, suitability violations breach of fiduciary duty, failure to supervise and negligent representative and sought compensatory damages of $5 million as well as interest, punitive damages, attorney fees, expert fees and forum fees.

The arbitration panel dismissed all of the causes of action but the breach of fiduciary duty and negligent misrepresentation on March 1, before denying all the claims.

“Principal Securities dodged a major, major bullet in this huge four-week arbitration claim,” said Andrew Stoltmann, founder of Stoltmann Law Offices in Chicago.

Allen, an advisor with 20 years of experience who has worked at eight firms, has two options complaints on his record from customers in 2011 and 2013, including one involving $80,000, according to his BrokerCheck record. Both complaints were denied. He was not named as a respondent in this arbitration.