Award

FINRA Dispute Resolution

In the Matter of the Arbitration Between:

Name of Claimant Case Number: 10-00012

Josephine Wayman

Name of Respondents Hearing Site: Los Angeles, California

Securities America, Inc.

Randall Ray Talbott

Nature of Dispute: Customer vs. Member and Associated Person

REPRESENTATION OF PARTIES
Claimant Josephine Wayman, hereinafter refen-ed to as "Ciaimanf: Alton G.
Burichaiter, Esq., and Joshua A. Waldman, Esq.. Burichalter Kessler Goodman &
George LLP, Irvine, Califomia; and L. Louis Raring, Esq., Raring Law Finn, Trabuco
Canyon, Califomia.
Respondents, Securities America, Inc. ("Securities America") and Randall Ray Talbott
("Talbott"), hereinafter collectively refenred to as "Respondents": Bruce M. Bettigoie,
Esq., Sutheriand Asbill & Brennan LLP, Washington, District of Columbia; and Bryan M.
Ward, Esq., Sutheriand Asbill & Brennan LLP. Atianta, Georgia.
CASE INFORMATION
Statement of Claim filed on or about: December 29, 2009
Claimant signed the Submission Agreement: December 24, 2009
Statement of Answer filed by Respondents on or about: March 12. 2010
Respondent Securities America signed tiie Submission Agreement: January 24, 2010
Respondent Talbott signed tiie Submission Agreement: February 10,2010
CASE SUMMARY
Claimant asserted tiie following causes of action: 1) breach of fiduciary duty; 2)
violation of industry mles; 3) fraud and deceit: intentional misrepresentation of fact; 4)
negligent misrepresentation of fact; 5) negligence; 6) negligent supervision; and 7)
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financial elder abuse - Cal. Welf. & Inst Code §§ 15610.30. 15657.5. The causes of
action relate to Claimant's investinents in Medical Capital promissory notes.

Unless specifically admitted in tiieir Answer, Respondents denied tiie allegations made
in tiie Statement of Claim and asserted various affinmative defenses.

RELiEF REQUESTED

In the Statement of Claim, Claimant requested:

1. On the first cause of action:

a. Damages in an amount according to proof, but which are in excess of
$729,000.00; and
b. An award of exemplary and punitive damages;
2. On the second cause of action:
a. Damages in an amount according to proof, but which are believed to be in
excess of $729,000.00; and
b. An award of exemplary and punitive damages;
3. On the third cause of action:
a. Damages in an amount according to proof, but which are believed to be in
excess of $729,000.00; and
b. An award of exemplary and punitive damages;
4. On tiie fourth cause of action, damages in an amount according to proof, but which
are believed to be in excess of $729,000.00;
5. On tiie tiftii cause of action, damages in an amount according to proof, but which are
believed to be in excess of $729,000.00;
6. On the sixth cause of action, damages in an amount according to proof, but which
are believed to be in excess of $729,000.00;
7. On the seventti cause of action:
a. Damages in an amount according to proof, but which are in excess of
$729,000.00;
b. An award of exemplary and punitive damages; and
c. An award of attorneys' fees and costs of suit, including all expert fees and
costs, as provided by Welf. & Inst. Code §15657.5;
8. On all causes of action:
a. For costs of suit herein;
b. For interest at tiie legal rate; and/or
c. For such further relief as the Panel may deem proper.

Respondents requested that the Panel reject Claimant's Statement of Claim in its
entirety and order that all of Respondents' attorneys' fees, costs and forum fees be paid
by Claimant.

At tiie close of tiie hearing. Respondents requested tiie expungement of all references
to the above captioned arbiti-ation from Respondent Talbott's registi'ation records
maintained by tiie Central Registiration Depository ("CRD").
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OTHER ISSUES CONSIDERED AND DECiDED

The Arbiti-ators acknowledge tiiat tiiey have each read tiie pleadings and other
materials filed by the parties.
The Panel's decision is based on what was actually known by Randall Talbott and
Securities America, Inc. at tiie relevant times and is not based on what additional
information could or could not have been discovered by Respondents regarding the
subject investments or the company offeringttieinvestinents. During the hearing, the
Chairperson issued subpoenas requested by Respondents for two witiiesses (tiiat did
not appear), but tiie proffered basis for tiie two witiiesses. i.e. tiiat Securities America,
Inc. could not and would not have discovered anytiiing further about the subject
investinent orttiecompany offering the investment, is irrelevant, because the decision
is based on what was actually known by Randall Talbott and Securities America. Inc. at
tiie relevant times. The Chairperson stmck from the record the Receiver's Report and
all associated documents as similariy being irrelevant. See also the Order of November
24,2010 regarding tills matter. Respondents chose not to bring in any otiier witiiesses
in response to that Order and tiie subpoenaed witiiesses did not appear, though the
proffered basis for such further testimony is irrelevant as stated herein.

The parties have agreed that the Award in this matter may be executed in counterpart
copies or that a handwritten, signed Award may be entered.
AWARD
After considering the pleadings, the testimony and evidence presented at the hearing,
tiie Panel has decided in full and final resolution of the issues submitted for
determination as follows:
1. Respondents Securities America and Talbott are jointiy and severally liable to and
shall pay Claimant compensatory damages in the amount of $734,118.00.

2. Claimant's request for pre-judgment interest is denied.

3. Respondents Securities America and Talbott are jointly and severally liable to and
shall pay Claimant post-judgment interest on tiie aforementioned award of
$734,118.00 at an interest rate of 10% per annum firom January 1, 2011 until tiie
award amount of $734.118.00 is paid in full.

4. Respondent Securities America is solely liable to and shall pay Claimant punitive
damages in the amount of $250,000.00 pursuant to The AriDi'trator's Manual,
published by the Securities Industry Conference on Arbitiration, p. 31, Califomia Civil
Code §3294 and Hobbs v. Bateman. Eichler. Hill Richards. Inc.. (1985) 164
Cal.App.3d174.
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5. Respondents Securities America and Talbott are jointiy and severally liable to and
shall pay Claimant attorneys' fees in tiie amount of $111.465.00 pursuant to The
Arbitrator's Manual, published by the Securities Industy Conference on Arbitration,
p. 31 and Advanced Micro Devices v. Intel Corp.. (1994) 9 Cal.4tii 362.

6. Respondents Securities America and Talbott are jointiy and severally liable to and
shall pay Claimant's costs of litigation and expert witiiesses inttieamount of
$59,883.00.

7. The Panel is aware tiiat Claimant Josephine Wayman may receive payments from
other sources trying to recover money for her investinent directiy from tiie company
offering the investment. Should Claimant receive any such recovery, she is entitled
to keepttiesame as additional punitive damages. She likewise may keep any
interest she has in the investments.

8. Respondents' request for expungement is denied.

9. Any and all relief not specifically addressed herein is denied.

FEES
Pursuant to the Code, the following fees are assessed:
Fiiing Fees
FINIRA Dispute Resolution assessed a filing fee* for each claim:
Initial Claim filing fee =$ 1,575.00
*The filing fee is made up of a non-refundable and a refundable portion.
Member Fees
Member fees are assessed to each member firmtiiatis a party in these proceedings or
to the member finnttiatemployed tiie associated person at thetimeof tiie events giving
rise to tiie dispute. Accordingly, as a party, Securities America, inc. is assessed tiie
following:
Member surcharge =$ 2,250.00
Pre-hearing process fee =$ 750.00
Hearing process fee =$ 4,000.00
Hearing Session Fees and Assessments
The Panel has assessed hearing session fees for each session conducted. A session is
any meeting between the parties and the arbiti'ator(s), including a pre-hearing
conference with tiie ari3itrator(s) that lasts four (4) hours or less. Fees associated with
these proceedings are:

Two (2) Pre-hearing sessions witii the Panel® $1,200.00 =$ 2,400.00

Pre-hearing conferences: May 10, 2010 1 session
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October 26, 2010 1 session

Twelve (12) Hearing sessions @ $1,200.00 =$ 14,400.00
Hearing Dates: November 16,2010 2 sessions
November 17, 2010 3 sessions
November 18, 2010 2 sessions
November 19, 2010 2 sessions
December 06, 2010 3 sessions

Total Hearing Session Fees =$ 16,800.00

1. The Panel has assessed $16,800.00 of the hearing session fees jointiy and severally
to Respondents.
All balances are payable to FINRA Dispute Resolution and are due upon receipt.
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ARsm^TIPHPANEt,
Joseph C. Watson Public ArtMtrator, PreskJing Chairperson
W.Alex King PublicArbitrator
Joel D. Davidman Non-F*ublk; Arbitrator

Concurring Arbitrators' Signatures

C.Waeon Signatijre Dat

Public ArbitrBlpr, Presiding Chairperson

W.Alex King Signature Date

Public Arbitrator

Joel D, Davidman Signature Date

Non-Public Art)itrator

Date of Sen/ice (For F l N i ^ Dispute Resolution use only)

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ARBITRATION PANEL
Joseph C. Watson Public Arbitiator, Preskiing Chairperson
W.Alex King Publk: Arbitrator
Joel D. Davidman Non-Pubiic Arbitrator

Concurring Arbitrators' Signatures

Joseph C. Watson Signature Date

Public Arbitrator, Preskiing Chairperson

W. Alex King
Public Arbitrator

Joel D. Davidman Signature Date

Non-Public Arbitrator

Date of Service (For FINRA Dispute Resolution use only)

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ARBITRATIONPANEL
Joseph C. Watson Public Arbitrator, Preskiing Chairperson
W. Alex King Pubiic Aribitrator
Joel D. Davkiman Non-Public ArtMtrator

Concuning Arbitrators' Slonaturas

Joseph G. Watson Signature Date

Public AriJitrator, Presiding Chalrpersoh

W. Alex King Sigriature Date

Public Aribifarator

Jojeif ID. Dayidmain Signature Pate

^ublic AMrator

Date of Service (For FiNRA Dispute Resolution use only)