Andrew Stoltmann

A Phone Number Is a Key

The theft did not require touching the account. It required convincing a telecommunications carrier to move a phone number onto a new SIM card.

Once the intruders held the number, they held the second factor: the codes that confirm identity, reset passwords, and authorize transfers. They entered the connected accounts and digital wallet and removed the cryptocurrency.

Andrew Stoltmann and Joe Wojciechowski brought the claim against the carrier rather than the exchange, on the theory that the loss began at the transfer counter — that the security failure was not the customer's password but a retail employee's decision to move a number to a stranger.

The American Arbitration Association hearing lasted nearly four days. The arbitrator awarded $995,000.

The same reasoning runs through his digital-asset work. In a completed Coinbase arbitration, transaction histories and authentication records connected platform conduct to a customer's loss. The award exceeded $617,000.

From the Other Side of the Desk

Stoltmann knows how a recommendation gets made because he used to make them.

He graduated from the University of Wisconsin–Madison in 1994 with a business degree and went to work as a licensed stockbroker, first at Olde Discount and then at Merrill Lynch. Then, while at DePaul University College of Law, he clerked in the Chicago office of NASD Dispute Resolution — FINRA's predecessor, and the office where the overwhelming majority of the country's securities arbitrations are decided.

He had seen both rooms before he ever appeared in one as counsel: the branch where the pitch happens, and the panel where it is judged.

What the Paper Says

Securities arbitration compresses a person's financial life into a record that can be tested in a hearing room. Monthly statements establish what was held and how fast it turned over. Trade confirmations fix price and timing. Emails preserve what the customer was told.

But the document that usually decides the case is the supervisory file — what the branch reviewed, what it flagged, and what it allowed to continue anyway.

The task is separating market loss from actionable conduct, because losses alone prove nothing. A portfolio that fell in a falling market is not a claim. The questions are narrower than that, and each has a paper answer: Did the recommendation match this customer? Were material facts disclosed? Did anyone have authority to trade the account? Did the firm respond to warning signs it had already seen?

Fictitious Bonds

A broker working from a Stifel Nicolaus branch sold bonds that did not exist and misrepresented the trading in his customers' accounts.

The customers' claims against Stifel focused on the points at which firm supervision could have detected the broker's conduct. The record included customer complaints, account activity that did not resemble the strategy on file, and warnings from outside the firm.

The panel awarded $4.47 million.

Former NBA player Horace Grant brought claims against Morgan Keegan over mutual funds, alleging fraud, misrepresentation, and omission; the arbitrators awarded $1.5 million. A retirement investor's claims against William Blair & Co. for breach of fiduciary duty and unauthorized trading turned on a single question — who was picking the trades — and FINRA arbitrators awarded more than $1.1 million. In King v. Morgan Keegan, mutual-fund claims produced an award of approximately $700,000. In Baldwin v. Wachovia, unauthorized trading and its tax consequences produced more than $400,000.

FINRA's Black Hole

In 2016 the Public Investors Arbitration Bar Association published a study of what happens after an investor wins.

A quarter of the arbitration awards issued to investors in 2013 had never been paid. In that single year, $62.1 million that panels had ordered paid to investors was simply not paid. The firm closed, or disappeared, or declined. The award remained a piece of paper.

Stoltmann calls it FINRA's black hole.

When PIABA elected him president for the 2017–2018 term, a national recovery pool for those awards led his agenda — an industry-financed fund to make winning investors whole. He put a number on what it would cost: less than $100 per registered representative.

He pressed on other fronts too. Preserve the fiduciary standard for retirement advice. Stop the expungement of misconduct from the BrokerCheck records the public relies on. And end non-attorney representation in the FINRA forum, on which he was blunt about his intentions.

Those proposals addressed the rules that shape outcomes for investors before any individual claim ever reaches a hearing.

Practice

Stoltmann founded Stoltmann Law Offices in Chicago in 2005 as a claimant-side practice, after years as a partner in a firm doing the same work. Over his career he has represented more than a thousand investors and tried roughly eighty cases. That trial experience informs how he evaluates evidence, prepares witnesses, and negotiates securities disputes.

The cases proceed in FINRA, AAA, and JAMS arbitration and in court, and the fact patterns rotate with the decade: Ponzi schemes, over-concentrated portfolios, unauthorized trading, financial exploitation of older investors, and now cryptocurrency platforms and the theft of a phone number. What does not rotate is the supervisory question. Somebody was supposed to be watching.

He earned his J.D. from DePaul in 1999. He edited the PIABA Bar Journal from 2001 through 2005, has served on PIABA's board since 2013, and co-authored Investor Rights for the Year 2000 and Beyond. He teaches securities law as an adjunct professor at Northwestern.