An adviser barred from the industry must pay more than $845,000 to Janney Montgomery Scott, according to a FINRA arbitrator’s ruling.
The broker-dealer won the clawback from David Seigerman, a onetime first vice president of investments in Janney’s Bedminster, N.J., office, in a Jan. 13 decision. Janney had filed a breach of contract claim in June, a month before FINRA banned Seigerman from the industry.
Seigerman's past clients accused him of shirking his fiduciary duty and making unauthorized investments, among five claims totaling $1.3 million, according to FINRA BrokerCheck records. The regulator ordered Seigerman to pay over $200,000 in settlements from 2010 and 2014, BrokerCheck records show.
A prior employer, Morgan Stanley, clawed back damages over $243,000 from Seigerman under a separate October 2015 arbitration decision. FINRA suspended him in April and barred him permanently in July after the regulator said he didn’t respond to requests for information.
He also never responded to Janney’s clawback filing. Efforts to reach Seigerman were not successful Wednesday morning. A Janney spokeswoman declined to comment.
A FINRA arbitrator ordered Seigerman to pay Janney damages plus interest dating back to July 2013, the month he started at the firm.
The arbitrator had served Seigerman with Janney’s claim through certified mail and sent him an overdue notice but received no response. Under FINRA regulations, the arbitrator could then move forward and rule on the dispute without any conferences or hearings.
Customer claims against Seigerman date back to his time at Morgan Stanley and a previous tenure at Citigroup Global Markets, spanning a 20-year career, according to BrokerCheck. He was managing $67.8 million in client assets at the time he joined Janney, according to On Wall Street.
A Morgan Stanley client, in one of the customer disputes, complained to the regulator that Seigerman didn’t follow instructions and breached his fiduciary duty between April 2012 and July 2013. The client requested damages of more than $356,000. FINRA awarded the client $160,000 in June 2014.
Another client at Citigroup accused Seigerman of unauthorized investments between 2007 and 2008, asking for more than $264,000 in damages, BrokerCheck records show. A settlement granted the client $43,000 in September 2010.
Morgan Stanley, similarly to Janney, filed a claim of breach of contract against Seigerman. He responded by accusing his prior employer of defamation and “tortuous interference with economic and prospective business advantage,” according to documents from the separate FINRA arbitration.
An arbitration panel ordered him to pay the damages, plus interest and attorney fees, raising the overall penalty against Seigerman to more than $324,000. Although he filed a counterclaim in that case, Seigerman did not appear at the hearing, according to the FINRA records.
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