The Expert's Examiner

Lotz v. CFD Investments and Vietor, FINRA ID No. 21-01564 (Des Moines, IA, Nov. 28, 2022)
January 9, 2023

Lotz v. CFD Investments and Vietor, FINRA ID No. 21-01564 (Des Moines, IA, Nov. 28, 2022)

As widely reported in the media, a former CFD Investments money manager has been ordered to reimburse several former clients to the tune of nearly $6 million.

Financial services media widely reported recently that former money manager Dana Bruce Vietor had lost his FINRA arbitration, and had been directed to pay $5.7 million to 12 former clients, “who said he urged them to liquidate their annuities and invest their money in a cancer treatment business he controlled.” See, for example, Finra Panel Orders Ex-Broker In Iowa To Pay $5.7M, FA Magazine (Nov. 30, 2022). We analyze below the Panel’s decision.

Claims Asserted
Claimants asserted the following causes of action: “misrepresentation, fraud-nondisclosure, negligent misrepresentation, breach of fiduciary duty, negligence, breach of contract, failure to supervise/respondeat superior, violations of the Iowa Securities Act, and federal and state control person liability. The causes of action relate to Claimants' allegations that, as a part of a cancer treatment scheme, D. Vietor (ed: Ashley Vietor (Bolson) was also a Respondent) represented that Claimants would make profits from services provided to cancer patients by buying a building to house cancer treatment and other equipment, but D. Vietor and CFD never provided them with financial information after they surrendered annuities (some with hefty surrender charges) based on D. Vietor's advice to place their funds in LLC notes. Claimants further alleged that the Vietors and CFD have not advised them of the current financial condition of their investments and that CFD took no supervisory action to protect investors and itself.”

CFDs Cross-Claim Against D. Vietor
In its cross-claim: “CFD asserted the following causes of action: express indemnification and implied or equitable indemnity. The causes of action relate to CFD’s allegations that D. Vietor expressly agreed to indemnify it for, among other things, any losses, liabilities, claims, and damages resulting from his conduct or based upon any action or asserted failure or negligence by Vietor to comply with federal or state securities laws and regulations. CFD alleged that that Vietor misrepresented the nature of his involvement with SRS to CFD and if CFD is found liable to Claimants, it should be entitled to indemnity from Vietor.”

Damages Sought
In the Statement of Claim, as amended, Claimants: “requested compensatory damages in the amount of $2,658,320.00; a minimum of $10,633,280.00 in punitive damages; attorneys' fees, expert fees, and FINRA costs…. In the Statement of Answer to Counterclaims, Claimants requested that the Counterclaims be dismissed with costs to be taxed to the Vietors including, but not limited to, attorneys' fees and expenses incurred to defend the filing, and an additional $10,000,000.00 in damages as a result of the Counterclaims…. At the hearing, Claimants requested a total of $20,000,000.00, which included compensatory and punitive damages.”

The Award
The Panel finds D. Vietor liable for $4,275,177 in compensatory damages to 12 of the 13 former clients. The Panel also awards $1,425,058 in attorney’s fees and $21,351 in costs. All other claims were denied or dismissed, including those asserted against CFD.

(ed: A large Award, indeed.)