Award FtNRA Dispute Resolution

In the Matter of the Arbitration Between:

Claimants Dr. Thomas J. Kiebach, et al.

Case Number: 13-01692

vs.

Respondent Pershing LLC

Hearinq Site: New Orleans, Louisiana

Nature of the Dispute: Customers vs. Member

This case was decided by an all-public panel.

REPRESENTATION OF PARTIES

For Claimants: Phillip W. Prels, Esq., Charles M. Gordon, Jr., Esq., Crystal Burkhalter, Esq., Caroline P. Graham, Esq., Charles Matthew Thompson, Esq., Jennifer R. Dietz, Esq , John Grinton, Esq. and Hugh Seligman, Esq., Preis Gordon, A.P.L.C, Baton Rouge, Louisiana.

For Respondent Pershing LLC: Thomas M. Farrell, Esq., Jeffrey J . Chapman, Esq , Elizabeth F. Edwards, Esq. and Melissa W. Nelson, Esq., McGuireWoods LLP, Richmond, Virginia.

CASE INFORMATION

Original Statement of Claim filed on or about: June 6, 2013. First Amended Statement of Claim filed on or about: June 27, 2013. With the exception of Claimants Ruth G. Lessing, Ruth G, Leasing IRA, Kevin R. Courville and Monica Courville. all Claimants signed the Submission Agreements' June 6,2013. Claimants Ruth G. Lessing, Ruth G. Lessing, IRA, Kevin R. Courville and Monica Coun/ille signed the Submission Agreements: June 25, 2013.

Statement of Answer to First Amended Statement of Claim filed by Respondent on or about: October 10, 2013. Pershing LLC did not sign the Submission Agreement.

Motion to Preclude Claims and Purported Evidence Regarding Anti-Money-Laundering ("AML") Issues filed by Respondent on or about: September 8, 2014. Opposition to Motion to Preclude Claims and Evidence Regarding AML Issues filed by Claimants on or about: September 12, 2014.

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Motion in Limine on CD Purchases for which Documents are Lacking filed by Respondent on or about: September 8,2014. Opposition to Motion in Limine on CD Purchases filed by Claimants on or about: September 11, 2014.

Motion for Explained Decision filed by Claimants on or about: September 15, 2014 Response to Motion for Explained Decision filed by Respondent on or about: September 16, 2014.

CASE SUMMARY

Claimants asserted the following causes of action in the Statement of Claim, as amended: breach of fiduciary duty; breach of contract; violation of the Louisiana Securities Act; violation of the Texas Securities Act; breach of duty as third party beneficiary; fraud; and negligent misrepresentation. The causes of action relate to an alleged Ponzi scheme involving Claimants' purchase of Stanford International Bank Certificates of Deposit ("SIB CDs")

Unless specifically admitted in its Answer, Respondent denied the allegations made In the Statement of Claim, as amended, and asserted various affimiative defenses.

RELIEF REQUESTED

In the Statement of Claim, as amended, Claimants requested: rescission of the sale of the SIB CDs plus interest on the purchase price; compensatory damages in the amount of $80,000,000.00, representing actual damages equal to the purchase price of the SIB CDs minus the current value of the SIB CDs; attorneys' fees; pre-judgment and post-judgment interest; costs; such other and further relief to which Claimants may be justly entitled; and all other equitable and legal relief as deemed just and appropriate by the Panel.

In the Statement of Answer, Respondent requested denial of Claimants' claims.

OTHER ISSUES CONSIDERED AND DECIDED

The Arbitrators acknowledge that they have each read the pleadings and other materials filed by the parties.

A complete list of Claimants is attached to this Award as Exhibit A.

Respondent did not file with FINRA Dispute Resolution a properly executed Submission Agreement but is required to submit to arbitration pursuant to the Code of Arbitration Procedure (the "Code") and, having answered the claim, appeared and testified at the hearing, is bound by the detennination of the Panel on all issues submitted.

Prior to the appointment of a Panel in this matter, Claimants filed their First Amended Statement of Claim in order to add the following parties as additional Claimants in this matter: Ruth G, Lessing, individually and on behalf of the Ruth G. Lessing IRA; Kevin R Courville; and Monica Courville.

FINRA Dispute Resolution Arbitration No. 13-01692 Award Paoe 3 of 6

On or about May 21,2014, the United States District Court for the Middle District of Louisiana (the "Court") issued a Permanent Injunction enjoining the parties listed below from proceeding in this arbitration, or from commencing or prosecuting any other arbitration, against Respondent with respect to the claims asserted in the Statement of Claim, as amended. The Court held that FINRA lacked jurisdiction over these parties because they did not have a direct customer relationship with Respondent, as required under Rule 12200 of the Code, and these parties did not have a written agreement with Respondent to arbitrate their claims.

1. Wanda Bevis 2. Thomas "Eddie" Bowden 3. Robert E. Feldman 4. Deborah Forbes 5. Russell Shane Gautreaux 6. Mark Calvin Johnson Trust No. 1 (Ameritrust Corporation, Trustee) 7. Claude Marquette 8. Kathleen S. Mier 9. Louis Mier 10. William Phillips 11. Holly Schwendimann 12. Howard Sklar, as Trustee on behalf of Albert Sklar QTip Trust FBO Howard Fred

Sklar, Albert Sklar QTip Trust FBO Judy Sklar and Albert Sklar QTip Trust FBO Suzanne Irene

On or about September 4, 2014, Claimants filed a Notice of Non-Participation in Putative Class Action Pursuant to Rule 12204(b)(2) of the Code in which they opted out of the matter entitled Lynne Turt<, e ta l v. Pershing, LLC, Docket No. 3:09-CV-2199, U.S. District Court, Northem District of Texas, Dallas Division.

Respondent filed a Motion to Preclude Claims and Purported Evidence Regarding AML Issues in which it asserted that: there is no private right of action for violation of AML laws; AML laws do not create a duty or standard of care that can be incorporated into other causes of action; and injecting AML compliance into this case would be manifestiy unfair. In their Response, Claimants asserted that: Claimants have not alleged a cause of action under AML; Respondent's violation of FINRA rules is admissible into evidence as evidence of a breach of a required standard of care of a FINRA broker; case law has already established the existence of a cause of action against Respondent and it would be illogical not to allow all evidence to be introduced to prove the claims; and AML laws do not preclude Claimants from introducing evidence on the standard of conduct that should be followed by a FINRA member firm.

Respondent filed a Motion in Limine on CD Purchases for which Documents are Lacking in which it requested that the Panel preclude certain identified Claimants from presenfing any evidence regarding the alleged CD purchases because they have failed to produce documentation that is relevant and necessary to evaluate their claims In their Response, Claimants asserted, among other things, that: Claimants have not been involved in any willful conduct regarding production of documentation, and have abided by the Panel's Order regarding third party discovery; Respondent, and not the unsophisticated elderly Claimants, have a record-keeping function; and Claimants will

FINRA Dispute Resolution Arbitration No. 13-01692 Award Page 4 of 6

prove at trial that they executed customer agreements with Respondent and thereafter purchased SIB CDs.

On or about September 14,2014, following a telephonic conference with the parties, the Panel issued an Order that denied Respondent's Motion to Preclude Claims and Purported Evidence Regarding AML Issues and Respondent's Motion in Limine on CD Purchases for which Documentation is Lacking,

Claimants filed a Motion for Explained Decision to which Respondent objected. The Motion and Response were fonA aixJed to the Panel for its consideration at the outset of the evidentiary hearing. On or about October 28, 2014, the Panel issued an Order that denied Claimants' Motion.

The parties have agreed that the Award in this matter may be executed in counteipart copies or that a handwritten, signed Award may be entered.

AWARD

After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions (if any), the Panel has decided in full and final resolution of the issues submitted for determination as follows:

1. Claimants' claims are denied in their entirety.

2. Respondent is liable and shall reimburse Claimants the sum of $10,000.00, representing costs associated with the hearing testimony of a witness taken in New York, New York on October 7, 2014. Said costs are comprised of plane fare, local transportation, hotel, meals, addifional court reporter expenses and telecommunication transmission costs.

3. Any and all relief not specifically addressed herein, including Claimants' request for attorneys' fees, is denied.

FEES

Pursuant to the Code, the following fees are assessed:

Filing Fees FINRA Dispute Resolution assessed a filing fee* for each claim:

Initial Claim Filing Fee =$ 1,800.00

*The filing fee is made up of a non-refundable and a refundable portion.

Member Fees Member fees are assessed to each member firm that is a party in these proceedings or to the member flrm(s) that employed the associated person(s) at the time of the event(s) giving rise to the dispute. Accordingly, as a party, Respondent is assessed the following:

FINRA Dispute Resolution Arbitration No. 13-01692 Award Page 5 of 6

Member Surcharge =$ 3,750.00 Pre-Hearing Processing Fee =$ 750.00 Hearing Processing Fee =$ 5,500.00

Hearina 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 arbitrator(s), including a pre-hearing conference with the arbitrator(s) that lasts four (4) hours or less. Fees associated with these proceedings are:

One (1) Pre-hearing session with a single arbitrator @ $450.OO/session =$ 450.00 Pre-hearing conference: May 28,2014 1 session

Five (5) Pre-hearing sessions with the Panel @ $1,200.00/session =$ 6,000.00 Pre-hearing conferences: February 5, 2014 1 session

March 14,2014 1 session July 24, 2014 1 session August 14, 2014 1 session September 9, 2014 1 session

Fifteen (15) Hearing sessions @ $1,200.00/session =$18.000.00 Hearing Dates: October 6, 2014 1 session

October 7, 2014 2 sessions October 8,2014 2 sessions October 9, 2014 3 sessions October 13, 2014 2 sessions October 14,2014 2 sessions October 15, 2014 2 sessions October 16, 2014 1 session

Total Hearing Session Fees — = $ 2 4 , 4 5 0 . 0 0

The Panel has assessed $12,225.00 of the hearing session fees jointly and severally to Claimants.

The Panel has assessed $12,225.00 of the hearing session fees to Respondent.

All balances are payable to FINRA Dispute Resolution and are due upon receipt.

NO?/03/2014,« 10:24 AM

FINRA Dispute ResolulJon Arfaifnation No. 13-01682 Award Page 6 of 6

p '• ('. 1

ARBITRATION PANEL

Michele N. O'Brien Brian P. Jakes, Sr. Mario Alberto Arteaga, Jr.

Public ArtDitrator, Presiding Chairperson Public Arbitnator PublicArbitrator

I, the undersigned Arialtrator, do hereby affirm that 1 am the individual described herein and who executed this instrument which is my award.

CoHcurrinq Arbitrators' Signatures

Mfchele N, O'Brien Public Arbitrator, PresWIng Chairperson

Signature Date

Brian P. Jakes, Sr. PublicArbitrator

Signature Date

Mario Alberto Arteaga, Jr. Publio ArtDitrator

Signature Date

Date of Service (For FiNRA Dfepute Resolution office use only)

11/03/2014 HON 11(02

RNRA Dispute Resolutton Arbitration No. 13^16^ AwaniRsoa6of8

ARBiTRATlOW PANEL

MIcMe N. O'Brien Brian P. Jalcea, Sr. Mario Alberto Arte^a, Jr.

Public Arbifrator, PresWIng Clhairperson Public Arbitrator Public Arbitrator

i, the unders^ned Arbitrator, do hereby affirm that I am the individual described herein and who executed this tnatrument which la my award.

Ckincurrinfi Attiitaiteis* Slgnaturis

Michd PuMb

lien Id Chairperson

Brian P. Jakes, Sr. ^ Public Arbitrator

SIgnatore Date

S^r^ture Date

Mario Alberto Artee^a, Jr. PublicArbitrator

Signature Date

3/i datod^^^toe (For FINRA Dispute Re^iutlon oMce lse on^

bv I 2014 §:52AM

Artttration No. 13-01682 Award Page 6 of 6

U. 2289

ARBITRATIQN PANEL

Michele N. O'Brien Brian P. Jakes, Sr. Mario Alberto Arteaga, Jr.

Public Arbitrator, Presiding Chairpereon Public Arbitrator Public ArtDitrator

I, the undereigned Arbitrator, do hereby afflrm that I em the individual described herein and who executed this Instrument which is my award.

Concurrinq Arbitrators' Signatures

Michele N. O'Brien Public Arbitrator, Presiding Chairpereon

Signature Date

Brian P. Jakes, Sr. Public Arbitrator

Signature Date

Mario Alberto Arteaga, Jr. ^ Public AriDitrator

Signature Date

Date of Service ( (For FINRA Dispute Resolution office use only)

Kiebach Claimant

Baiimann. Mamie Helen (Mamie C. Sanchez as power of attorney for Mamie Helen Baumann)

Heau champ, Royce E.

Becker, Joseph

Benton B Johnson Test TR II (AmeriTrust Corporation, as Trustee on behalf of Benton B Johnson Test TR II)

Benton Bruce Johnson Trust #1 (AmeriTrust Corporation, as Trustee on behalf of Benton Bruce Johnson #1)

Beven, Terence

Boyd, Linda

Burris, Jerry

Carter, Anita Ellen

Chi.sholm, Jim

Comeaux, Patrick

On behalf of Account FINRA ClalniMnt

ID Mamie Helen Baumann

Royce E. Beauchamp IRA

Joseph R. Becker

Benton B Johnson Test TR SAS; STSGC20072D/C

Benton Bruce Johnson Trust #1

Terence or Elizabeth Beven; Terence Beven IRA

Jerry W Boyd or Linda S Boyd

Jerry M. Burris IRA

Anita Ellen Carter

Clyde J. Chishoim IRA

Patrick J. Comeaux IRA

Courville, Kevin R and Monica

D'Amore, Mallory Chastant (Paige)

D'Amore, Ralph

Daniel, Carolyn H.

Daniel, F. Kenneth ("Ken")

Danielson, Roderick ("Rod")

Dawson, William

Dehay, Wallace L. ("Kelly) Jr.

Demarest, Fred

Dore, Cindy

Diiinestre, Marcel and Margaret

Kevin R Courville and Monica Courville

Mallory Chastant D'Amore

Ralph Daniel D'Amore MD A Processional Corp; Ralph D. D'Amore IRA

Carolyn H. Daniel IRA

12

13

14

15

F. Kenneth Daniel and Carolyn M. Daniel; F. Kenneth Daniel IRA

Roderick L. Danielson

William C. Dawson IRA

Wallace L. Dehay IRA

Fred R. Demarest IRA

Marcel J Dumestre Jr. or Margaret Dumestre

17

18

20

Cynthia R. Dore Separate Property 21

l arr. Leah Leah S Farr IRA

Fischer, Martin J.

Forbes, Kendall

Gentry, Cindy L.

Gentry, Tommy G.

Giambrone, May

Gildersleeve, Lynn

Gildersiecve, Robert

Gill, Gordon

Martin J. Fischer

George Kendall Forbes; G. Kendall Forbes IRA

Tommy G. Gentry and Cindy L. Gentry; STC Custodian FBO Cindy L. Gentry IRA; International Bank and Trust Company FBO Cindy Gentry IRA 33-51226 IRA FBO Tommy Gene Gentry (Pershing as Custodian); S I C Custodian FBO Tommy G. Gentry IRA; Tommy G. Gentry and Cind> L. Gentry Michael J Giambrone or May L Giambrone

Lynn G. Gildersleeve Bene IRA; Lynn G. Gildersleeve; AKA Lynn Gildersleeve Michelli Inlervivos Trust Robert V. Gildersleeve Bene IRA; Robert Gildersleeve Jr Trust Intervivos Trust

Gordon C. Gill IRA

24

25

26

28

29

. 0

31

32 Gill, Nancy Nancy N Gill

Goeckel, Jon K.

Goeckel, Loretta B

Jon K. Goeckel IRA; Jon K Goeckel and Loretta B Gt)cckel; Jon Goeckel

IRA FBO Loretta B Goeckel; Jon K Goeckel and Loretta B Goeckel

33

34

Graham, Jason

Graham, Robert

Gruenwald, Charles (Dr.)

Hailman, Bamey L,

Haney, Patrick

Hart, Charles

ffebert. Patsy

Ilutcherson, John R.

Kenaley, Donald H.

Kiebach, Thomas

1 .anders. Don

Jason Scotl Graham

Robert E. Graham

Charles Gruenwald, Jr.

Bamey L, Hailman IRA

Patrick Haney

Charles Hart IRA 33-51202; Charles Hart IRA STSGC41251

Patsy J. Hcbert

John R. Hutchcrson IRA

Donald H. Kenaley IRA

rhomas J. Kiebach

Don G. Landers: Don G. Liinders RA

36

37

38

39

40

41

42

43

44

45

Landry, Daniel and Dianna Daniel P Landry or Dianna l.ynn Landry; Daniel P. Landry IRA

46

Laplante, Merrill

Lessing, Ruth G

Magee, Greg

Marston, Ronald

Merriii L Laplante 47

Ruth G. Lessing; Ruth G. Lessing 48 IRA

Gregory A. Magee IRA

Ronald R. Marston IRA; Ronald and Susan Marston

Martha JC Johnson Gen Skpg Tr (AmeriTrust Corporation, as Trustee on behalf of Martha JC Johnson Gen Skpg Tr)

Mayhall, Jean Anne

Mayhall, Jean Anne and John Wade (on behalf of Microchip ID Systems Pension Fund)

Melilli, Kathleen

Millet, Jacqueline

Martha JC Johnson Gen Skpg Tr-SAS

Jean Anne Mayhall

Microchip ID Services INC Retirement Plan

Kathleen F. Melilli IRA

Jacqueline A. Millet IRA

Nix, Bobby STC Custodian FBO Bobby J. Nix IRA

49

50

51

52

53

54

55

56

57

5H

Nix. Margaret Margaret S. Nix IRA

Oliver, Kirk R. Kirk R. Oliver or Mary C. Oliver: Kirk R. Oliver IRA

Oliver, Mary C.

Ordoyne, Arthur

Ordoyne, Lonnie

O'Rear, Bennie and Claudia

Patemostro, Mary Ann

Philippe, Lynn

Power Packing Co. Inc. Agency

Rathbone, Monroe J. (IV)

Rath bone, Richard (Dr.)

Roland, James and Susan

Mary C. Oliver IRA; Kirk R. Oliver or Mary C. Oliver

59

Arthur J. Ordoyne IRA 60

Lonnie P. Ordoyne IRA

Bennie M. O'Rear and Claudia P. O'Rear

Angelo A. Patemostro or Mary Ann Patemostro

Lynn J. Philippe IRA; Lynn J Philippe; Joseph H Philippe or Lynn J Philippe

Richard F. Rathbone; Richard F. Rathbone IRA

James W. Roland and Susan S. Roland

62

63

64

Power Packing Co. Inc. Agency 65

Monroe J. Rathbone IV; Monroe J. ' 66 Rathbone IV IRA

67

68

Romig, Jessie Jessie Romig 69

70 Savoy, Julie Julie Savoy IRA

Schwendimann, Robert

Smith, Bruce P.

Smith, G. Rogers or Harriet

Smith, Robert

Starkey, Rodney

Stegall, Carol H. and James

Stone, Walter Bruce

Tarver, Terry

Unglesby, Gail and Lewis

Wade, John

John R. Schwendimann IRA

Bruce P. Smith

G Rogers Smith or Harriet S Smith

71

72

73

Robert E. Smith, Jr. IRA; Robert Smith or Carolyn Smith

Rodney P. Starkey IRA

74

75

James H Stegall or Carol II Stegall; 76 James H. Stegiill IRA

Walter B. Stone IRA

STC Custodian FBO Terry Tarver IRA; Terry Tarver IRA

Gail H Unglesby

77

78

79

John R. Wade HO

HI

82

White. Charles Charles L. White IRA

Wilkewitz, Ken Kenneth G. Wilkewitz IRA

Wilson, Stephen

Witmer, Martha

Witmer, Sharon

Bone and Joint Clinic FBO Stephen M Wilson

Martha J Witmer

Sharon J. Witmer IRA

m

85