Debt Stemming From Arbitration Award Survives Broker’s Bankruptcy

A broker ordered by a FINRA arbitration panel to pay his former customers approximately $385,000 in damages can’t discharge his debt in bankruptcy, the U.S. Court of Appeals for the Tenth Circuit said Nov. 14

The debt resulted from a judgment of a securities law violation, even though the broker didn’t attend the arbitration hearing to defend allegations he sold his clients unsuitable securities, Chief Judge Timothy Tymkovich wrote.

Broker Was No-Show.

In 2010, the investors launched arbitration prodeedings against two broker-dealer firms and their broker Larry Ivan Behrends, alleging they were sold more than $623,000 worth of five highly ...