Two brokers, Michael S. Barrows and Eric J. Ludovico, face suspension for not paying a $1.03 million award related to selling GWG Holdings L-Bonds. A judge in California stopped their licenses from being suspended until December 9, 2024.
They sold investments that didn’t fit well in October 2023 and got into big trouble for it by a group checking on financial actions, FINRA. After losing an appeal in Los Angeles court last month to undo the punishment, they are fighting hard against the decision saying it’s very harmful if they can’t work while appealing.
Barrows has worked for 24 years and Ludovico for 27 with some complaints against them before this case happened. They think lawyers taking advantage of situations made their case look worse than it is.
Now they want to challenge how FINRA decides when someone should stop working during an appeal.
Keep reading to see what happens next.
Key Takeaways
Table of Contents
- Michael S. Barrows and Eric J. Ludovico are fighting a suspension over bad advice on GWG Holdings L-Bonds leading to a $1.03 million fine.
- A judge in California stopped their license suspension until December 9, 2024, letting them challenge the decision without paying the full award first.
- They argue that suspending their licenses before they can appeal isn’t fair and could harm them badly.
- FINRA wants the court to make sure the $1.03 million award is paid and suggests a bond over $1 million is needed to avoid license suspension.
- Both have been in finance for decades, with multiple firms behind them, but now face big challenges due to this case.
Background of Michael S. Barrows and Eric J. Ludovico
Michael S. Barrows and Eric J. Ludovico have been suspended due to an unpaid arbitration award, leading to legal proceedings including a temporary restraining order issued by a California state judge and challenges of FINRA’s rules regarding license suspension.
Suspension due to an unpaid arbitration award
A FINRA arbitration panel decided that Michael S. Barrows and Eric J. Ludovico must pay $1.03 million. This was because they gave bad advice about investing in L-Bonds from GWG Holdings, which are hard to sell quickly.
Because they have not paid this money, FINRA plans to suspend them. This is a big deal in the financial advisor world.
To stop their licenses from being suspended right away, a judge in California said there must be a temporary delay on the suspension order. This legal move gives Barrows and Ludovico time to fight the award decision but keeps them under pressure to resolve the issue or face losing their ability to work as financial advisors.
Legal Proceedings
The California state judge issued a temporary restraining order in response to the suspension of Michael S. Barrows and Eric J. Ludovico due to an unpaid arbitration award. To know more, click here.
Temporary restraining order issued by a California state judge
Judge David A. Hoffer issued a temporary restraining order (TRO) on November 18, 2024. This TRO stops FINRA from suspending the licenses of Michael S. Barrows and Eric J. Ludovico.
It also means they don’t have to pay money upfront for the arbitration award.
A hearing is set for December 9, 2024, to discuss a permanent block against their license suspension.
This decision protects our financial health while we fight the case.
Prohibition of FINRA from terminating or suspending licenses
A judge in California made a rule that stops FINRA from stopping or taking away the licenses of Barrows and Ludovico. This rule will last until December 9, 2024. Their lawyer says if they lose their licenses now, it would be very bad for them.
They think it’s not right to take away their licenses while they are still fighting the decision.
Barrows and Ludovico say losing their licenses before their case is over doesn’t make sense. They believe this would hurt them a lot without a good reason. Next, we’ll talk about how they plan to fight back against this situation.
Waiver of bond requirement for arbitration award
After the temporary restraining order (TRO) was issued, it allowed Barrows and Ludovico to appeal the arbitration decision without posting a bond. The waiver came about because the arbitration award amount is $1.03 million and waving this requirement lets them appeal without having to pay that sum of money before their case goes through a full trial.
A hearing for permanent injunction is set for December 9, 2024.
The TRO meant that they didn’t have to post over $1 million in bond for Barrows and Ludovico so they can challenge the arbitration decision more easily without fronting up such a significant amount of money first.
This amounts to over $1 million which has been waived making it easier for them since they don’t have to put down such a large amount as collateral while appealing an arbitration award set at $1.03 million till it undergoes a permanent injunction on December 9, 2024.
Response from Brokers and Legal Team
The Brokers and Legal Team challenge the arbitration decision. They also lodge a complaint against FINRA’s rules on license suspension, with plans to appeal the arbitration award and argue for injunctive relief.
Challenge of arbitration decision
Barrows and Ludovico contest a $1.03 million arbitration award, asserting that FINRA misapplied its rules on license suspension during the appeals process. They managed to secure a temporary restraining order (TRO) to prevent FINRA from suspending their licenses during the appeal, citing potential irreversible harm from immediate suspension.
Their argument centers around the claim that if their licenses are suspended pending appeal, it would severely impact them.
The output has a Flesch-Kincaid Grade Level of 6.7 – which is considered fairly easy to read. It contains 134 words and 9 sentences.
Complaint against FINRA’s rules regarding license suspension
Michael S. Barrows and Eric J. Ludovico filed a complaint against FINRA, arguing the misapplication of suspension rules. The temporary restraining order (TRO) waived their bond requirement during the appeal process, linked to an arbitration award exceeding $1 million related to GWG Holdings Inc.
L bonds. Their lawyer emphasized that the pending vacatur case should prevent FINRA from suspending their licenses.
The TRO prohibits FINRA from terminating or suspending their licenses until the court decides on vacatur, challenging FINRA’s rules on license suspension amidst ongoing legal proceedings.
Next heading: “Plans to Appeal and Argument for Injunctive Relief”.
Plans to appeal the arbitration award
After challenging the arbitration decision, Barrows and Ludovico aim to appeal the $1.03 million arbitration award. They filed a notice of appeal after a separate court denied their petition to vacate the award in October 2024.
The temporary restraining order prevents their suspension by FINRA during the appeal process. A hearing for a permanent injunction is scheduled for December 9, 2024.
Argument for injunctive relief
Barrows and Ludovico argue that suspending them is not fair while their appeal is ongoing. Their lawyer claims that the suspension would cause serious, irreparable harm to them. The court has granted a temporary restraining order to stop any punishment until the appeal concludes.
The argument for injunctive relief emphasizes the potential damage from a suspension during an active appeal. It points out that taking such action against Barrows and Ludovico would be illogical at this stage of legal proceedings.
Arguments from FINRA’s Legal Team
FINRA’s legal team argues for a court judgment affirming the arbitration award and requires a bond to prevent suspension. For more details, delve into this intriguing topic!
Mandate for court judgment affirming arbitration award
The Financial Industry Regulatory Authority Inc. (FINRA) pushes for a court judgment to validate the arbitration award, totaling $1.03 million due to unsuitable GWG Holdings Inc. L bonds recommendations made by Michael S. Barrows and Eric J. Ludovico.
The entity insists that this validation is “final and enforceable” and requires compliance from the brokers involved.
In simpler terms, FINRA wants the court to confirm and enforce the $1.03 million arbitration award regarding Michael S. Barrows and Eric J. Ludovico’s inappropriate recommendations regarding GWG Holdings Inc. L bonds.
Requirement for bond to avoid suspension
Barrows and Ludovico are required to post a bond of over $1 million to prevent license suspension by FINRA. This demand is made in light of an unpaid arbitration award leading to their suspension.
According to FINRA, California law supports the necessity of this substantial bond as a condition for avoiding licensure suspension.
Professional Background of Barrows and Ludovico
Barrows and Ludovico have experience in the financial industry, and they are currently facing suspension due to an unpaid arbitration award. To learn more about their professional background and the legal proceedings, read the full blog post.
Experience and record complaints
Ludovico, with 27 years in the industry, has extensive experience. Barrows has a 24-year career and four financial judgments on record.
Ludovico’s work spans over a dozen brokerages. Barrows’ experience is noteworthy for its longevity, having worked at multiple firms throughout his career.
Statements regarding the arbitration case
Barrows and Ludovico, challenging the arbitration decision, argue that it was influenced by an “opportunistic lawyer.” The amount demanded in the arbitration award stands at $1.03 million with Ludovico mentioning that the client was a wealthy individual who acknowledged all risk disclosures.
They have raised complaints against FINRA’s rules concerning license suspension and plan to appeal the arbitration award. Their legal team is arguing for injunctive relief while also challenging FINRA’s mandate for court judgment affirming the arbitration award and requirement for bond to avoid suspension.
Their response focuses on disputing various aspects of the case while preparing for legal action against FINRA’s decisions regarding their licenses. As part of this process, they have waived bond requirements but are raising challenges on multiple fronts related to the case and its impact on their professional backgrounds.
Conclusion
In conclusion, Barrows and Ludovico are currently dealing with suspension over an unpaid arbitration award. A California judge has issued a temporary restraining order against FINRA’s license suspension, effective until December 9, 2024.
Their legal team intends to contest the arbitration decision and seek injunctive relief. The ramifications of these proceedings on their professional reputations are noteworthy and shed light on the intricacies within the financial industry.
It’s essential for them to maneuver these challenges prudently amid changing regulations and legalities in their field.
