Sigma Financial Faces $4.5 Million in Investor Arbitration Claims
From the Desk of Jim Eccleston at Eccleston Law:
The large Ann-Arbor, Michigan-based investment advisor, Sigma Financial Corp., is facing four arbitration claims seeking nearly $4.5 million in damages, according to the firm’s most recent financial statement. While it is unknown what the clients are alleging, several million-dollar legal claims can lead to dire consequences for independent advisory firms that rely on notably tight margins. According to InvestmentNews, the $4.5 million in arbitration claims represents at least 3% of Sigma’s $124.3 million in reported revenue from 2019.
Nevertheless, potential arbitration damages reported in financial statements are typically estimates because a client suing a firm for $1 million may receive a reduced award or have the claim dismissed entirely. According to the firm’s Focus Report, the firm has set aside nearly $652,000 in an effort to prepare for the claims. According to the filing, Sigma “has recorded a loss contingency of $651,834 in accounts payable and other liabilities for potential losses, costs associated with the defense of these customer claims, and a pending settlement.”
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.
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