March 4, 2024



A financial advisor’s more than $2 million FINRA arbitration award has been confirmed in court, but her dispute with her licensed buyer has spilled over into other cases.

Devin Garofalo of Midlothian, Virginia Colonial River Wealth Management Failure to prove that the arbitrator acted improperly or displayed improper motives in the arbitration Decision in favor of Jayne Di Vincenzo in Savannah, Georgia Trust Edge ConsultantsA Richmond City Court judge ruled earlier this month. Garofalo’s lawyers said he plans to appeal and that his firm is also suing her former brokerage, Cambridge Investment Research.

March 2022 Arbitration decision The FINRA panel in Norfolk included an arbitrator who Judge Jacqueline McClenney said had a “mindful direct relationship” with Di Vincenzo’s business and that she had been involved in the case before the case. The relationship exhibited a “weak” and “fragile link,” wrote the opinion piece. Michael A. Glasser and Two Other Arbitrators Unanimously Award $2.07 Million in Damages, Unpaid Commissions Based on DiVincenzo’s Allegations of Breach of Contract and Other Rule Violations Following 2020 Transactions , attorney’s fees, expert witness fees, and interest.

In his June 8 decision, McClenny wrote: “The Court finds that Respondent failed to present facts to objectively establish a degree of partiality such that a reasonable person might conclude that the arbitrator had acted improperly. motive.” “The Court finds that Respondent failed to bear the burden of proving that Arbitrator Glasser’s misconduct or that the rights of the parties were harmed thereby. The Court finds that Respondent failed to bear the burden of proving that the arbitrator exceeded his authority. “

On these grounds, McClenny dismissed Garofalo’s petition to set aside the award and affirmed the arbitration award.

“I’m very happy with the result,” DiVincenzo, who was affiliated with LPL Financial at the time of the deal and later left Cambridge to join Kestra Financial, said in an interview. “It was the right decision and legally sound.”

Garofalo’s attorney, Tom Wolf of Miles & Stockbridge, said Glasser should have disclosed DiVincenzo’s company’s past business relationship with a bank in which he was a shareholder and was a Board member of the bank’s parent company. Wolf said in an email that the judge’s decision to confirm the ruling “should not affect” a pending lawsuit brought by a Colonial River subsidiary alleging that DiVincenzo and Cambridge violated the terms of the asset purchase agreement. Garofalo also brought a FINRA arbitration case against Cambridge.

“The legal issue is whether the relationship was ‘trivial,’ and whether the arbitrator admitted wrongdoing by failing to conduct the necessary investigation and thereby submitting false affidavits, thereby compromising Devin’s rights,” Wolf said. “Devin has the right to disclose these absolute right to information so that he can make an informed decision in selecting an arbitrator. FINRA rules do not impose time limits on the relationships and interactions of the parties that must be disclosed.”

A representative for the University of Cambridge declined to comment on the case, citing a policy against commenting on litigation.

The case is a cautionary tale of the lengthy litigation that can ensue when M&A deals fail and the difficulty of overturning arbitration awards.

Last year, Wells Fargo prevailed in the appeals court decision overturned a rare ruling Tried by Georgia County Court Set aside the arbitration award.In a separate case brought by a consultant against a Cetera Financial Group branch manager who accused her of breaching the terms of the sales agreement, a planner prevailed awarded her more than $500,000 in awards earlier this year. It took her almost five years to get a decision in the arbitration case.

Cases Involving Failed Succession Planning or Business Transfers Reveal Reasons for M&A Advisory Firms Consultant Growth Strategies Registered investment advisory firm owners are often reminded that “you can pay for advice now, or you can pay for an agent later,” principal Brandon Caval said in an interview. The need to “hire good legal counsel early in the planning process” is “one of the hard things to ignore” in any deal. Industry-wide M&A transaction flowKaval said.

“There have been more deals in the past five years than ever before,” he said. “The chances of a disagreement will only increase and these things will end up in some sort of legal process.”

The arbitration revealed that DiVincenzo filed suit against Garofalo and Colonial River in September 2020, alleging breach of contract, breach of the covenant of good faith and fair dealing, disparagement and defamation, fraud and misrepresentation, and tortious interference with commercial expectations. She is seeking to defer much of the payment in the February 2020 sale of her clinic for $3.6 million, which has $170 million in client assets from 330 families and $1.4 million in annual revenue.

Garofalo argued that DiVincenzo violated the agreement by hiring a Colonial River employee and retaining customers from the business she was selling in the deal. The case pending in Richmond federal court charges her and Cambridge with tortious interference and conspiracy.

In his attempt to overturn the arbitration award, Garofalo accused Glasser of “clear partiality” because DiVincenzo’s relationship with the bank’s trust arm paid $12,876 five years before the case began, according to the judge’s order. commission.

The next hearing in the federal case is scheduled for June 27, court records show. The judge in that case earlier this month ordered the discovery phase of the case to be suspended until after the municipal court’s arbitral affirmation decision or a motion to dismiss filed by Cambridge and DiVincenzo.