Award FINRA Dispute Resolution

In the Matter of the Arbitration Between:

Claimants Case Number: 10-04476 Brian Joseph Korbelik 2000 Trust Brian Joseph Korbelik 2007 Trust Debra A. Korbelik Trust Jason Kyle Korbelik 2000 Trust Jason Kyle Korbelik 2007 Trust Robert B. Koriselik Debra A. Korbelik Robert B. Korbelik Trust

vs.

Respondents Hearing Site; Denver, Colorado David J. Barberis IVIelissa Corrado-Harrison Merrill Lynch, Pierce, Fenner & Smith Incorporated Gregory C. Richardson

Nature of the Dispute: Customers vs. Member and Associated Persons

The case proceeded under the Optional All Public Panel Rule/ Majority Public Panel

REPRESENTATION OF PARTIES

For Claimants Brian Joseph Korbelik 2000 Trust, Brian Joseph Korbelik 2007 Trust, Debra A. Korbelik Trust, Jason Kyle Korbelik 2000 Trust, Jason Kyle Korbelik 2007 Trust, Robert B. Korbelik, Debra A. Korbelik, and Robert B. Korbelik Trust, hereinafter referred to collectively as "Claimants": Alan C. Friedberg, Esq., Berg Hill Greenleaf & Ruscitti LLP, Boulder, Colorado.

For Respondents David J. Barberis ("Barberis"), Melissa Corrado-Harrison ("Corrado-Harrison"), Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Gregory 0. Richardson ("Richardson"), hereinafter referred to collectively as "Respondents": Bruce W. Day, Esq., and Tare A. LaClair, Esq., Crowe & Dunlevy, PC, Oklahoma City, Oklahoma.

CASE INFORMATION

Statement of Claim filed on or about: October 5, 2010.

Claimants signed the Submission Agreement: Novembers. 2010.

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Statement of Answer filed by Respondents on or about: February 11, 2011.

Merrill Lynch, Pierce, Fenner & Smith Incorporated signed the Submission Agreement: December 1, 2010.

Gregory C. Richardson signed the Submission Agreement: June 2, 2011.

David J. Barberis signed the Submission Agreement: July 25, 2012.

Melissa Corrado-Harrison signed the Submission Agreement without dating it

CASE SUMMARY

Claimants asserted the following causes of action: 1) Colorado Securities Act violations; 2) breach of fiduciary duty; 3) professional negligence; and 4) negligent supervision. The causes of action relate to Claimants investment in various hedge funds, private equity funds, structured products and variable annuities.

Unless specifically admitted in their Answer, Respondents denied the allegations made in the Statement of Claim and asserted various affimiative defenses.

RELIEF REQUESTED

In the Statement of Claim, Claimants requested: 1. Actual damages of approximately $6,000,000 00; 2. Exemplary damages; 3. Pre-judgment interest as provided by statute; 4. Post-judgment interest; 5. Attorneys' fees and costs; and 6. Such other and further relief as the Panel deems proper and appropriate.

In their Answer, Respondents requested: 1. Denial of the Claimants' claim in its entirety; 2. Costs and fees; and 3. The Central Registration Depository records of Barberis, Corrado-Harrison, and

Richardson be expunged.

At the close of the hearing, Claimants reduced their damages by $650,000.00, previously alleged to have been lost from an investment in Albeo Technologies.

OTHER ISSUES CONSIDERED AND DECIDED

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

Respondent Corrado-Harrison did not file with FINRA Dispute Resolution a properly executed Submission Agreement. Corrado-Harrison signed the Submission Agreement without dating it. On November 10, 2011, FINRA Dispute Resolution sent a notice to Respondent Corrado-Harrison advising of the deficiency to the Submission Agreement

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for failure to date it The Panel finds Respondent Corrado-Harrison 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 determination of the Panel on all issues submitted.

During the recorded evidentiary hearing. Respondents Barberis, Corrado-Harrison and Richardson moved to dismiss Claimants' claims against them. The Panel denied the motion as being premature. After the conclusion of Claimants' case-in-chief, Respondents Barberis, Corrado-Harrison and Richardson re-raised their motion to dismiss all claims against them. After due deliberation, the Panel denied the motion on the merits.

Also during the recorded in-person evidentiary hearing, the Panel heard evidence on Respondents Barberis, Corrado-Harrison and Richardson's requests for expungement of their Central Registration Depository records.

The Panel met on a conference call to discuss and issue an order based upon the letter dated July 23, 2012 from Claimants' representative, Alan C. Friedberg, concerning a modification of loss calculations. Also considered was the letter dated July 25, 2012 from Respondents' representative, Bruce W. Day, objecting to the additional "items of damages related to Mr. Korbelik's alleged losses on this private equity expenditures." Also considered was the Respondents' "Affidavit of Fees and Costs," submitted by Bruce W. Day that was delivered on July 23, 2012. After consideration, the Panel ruled that these documents were considered in the award of judgment.

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, and post-hearing submissions, the Panel has decided in full and final resolution of the issues submitted for determination as follows:

1. All claims by Claimants are denied in their entirety with prejudice.

2. Claimants Robert B. Korbelik and Debra A. Korbelik are jointly and severally liable for and shall pay to Respondents $25,000.00 in costs.

3. The Panel recommends the expungement of all references to the above-captioned arbitration from Respondents David J. Barberis, Melissa Corrado-Harrison, and Gregory C. Richardson's registration records maintained by the Central Registration Depository ("CRD"), with the understanding that pursuant to Notice to Members 04-16, Respondents David J. Barberis, Melissa Corrado-Harrison, and Gregory C. Richardson must obtain confimiation from a court of competent jurisdiction before the CRD will execute the expungement directive.

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Unless specifically waived in writing by FINRA, parties seeking judicial confirmation of an arbitration award containing expungement relief must name FINRA as an additional party and serve FINRA with all appropriate documents.

Pursuant to Rule 12805 of the Code, the Panel has made the following Rule 2080 affirmative findings of fact:

The claim, allegation, or information is factually impossible or clearly erroneous; and

The claim, allegation, or information is false.

The Panel has made the above Rule 2080 finding based on the following reasons:

The Claimants alleged that the Respondents violated the Colorado Securities Act in a variety of ways by, for example, making false representations of fact, material omissions of fact, and/or creating a device, scheme or artifice to defraud Claimants. The Panel did not find that the Respondents violated the Colorado Securities Act.

The Claimants alleged that the Respondents breached fiduciary duties to them. The Panel did not find that the Respondents, under these particular circumstances, owed Claimants a fiduciary duty. The Panel believed that even if a fiduciary duty was owed, Respondents did not breach it in this case.

The Claimants alleged that Respondents made recommendations of unsuitable securities purchases for them in violation of industry regulation, custom, and applicable law. The Panel did not find that Respondents violated applicable suitability standards.

The Panel made determinations based upon all the testimony and exhibits in a two-week hearing as to what was correct and what was erroneous, what was true and what was false. The Panel considered thousands of pages of exhibits submitted by both sides, heard over fifty hours of testimony, and ruled on various evidentiary matters.

After the hearing concluded, the Panel determined the allegations of Claimants to be "clearly erroneous" and "false" within the meaning of the FINRA rules governing expungement. The Panel determined that the motion to expunge the CRD records of the individual Respondents should be granted. This was a unanimous decision of the Panel.

4. Any and all relief not specifically addressed herein, including exemplary damages, is denied.

FEES

Pursuant to the Code, the following fees are assessed:

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

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Initial Claim Filing fee =$ 1,800.00

*Tlie 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 firm(s) that employed the associated person(s) at the time of the event(s) giving rise to the dispute. Accordingly, as a party, Merrill Lynch, Pierce, Fenner & Smith Incorporated is assessed the following:

Member Surcharge =$ 3,350 00 Pre-Hearing Processing Fee =$ 750.00 Hearing Processing Fee =$ 5,500.00

Adjournment Fees

Adjournments granted during these proceedings:

April 17-20, 24-26, 2012, adjournment by Respondents = waived

Contested Motion for Issuance of a Subpoena Fees Fees apply for each decision on a contested motion for the issuance of a subpoena. One (1) Decision on a contested motion for the issuance of a subpoena with one arbitrator @ $200.00 = $200.00

Total Contested Motion for Issuance of Subpoenas Fees = $200.00

1. The Panel has assessed $100.00 of the contested motion for issuance of subpoenas fees jointly and severally to Claimants.

2. The Panel has assessed $100.00 of the contested motion for issuance of subpoenas fees jointly and severally to Respondents.

Hearing Session Fees and Assessmente 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 ari3itrator(s), that lasts four (4) hours or less. Fees associated with these proceedings are:

Four (4) Pre-hearing sessions with a single arbitrator @ $450.00/session = $1,800.00 Pre-hearing conferences: January 5, 2012 1 session

January 13, 2012 1 session May 14, 2012 1 session June 20, 2012 1 session

Three (3) Pre-hearing sessions with the Panel @ $1,200.00/session = $3,600.00 Pre-hearing conferences: June 8, 2011 1 session

February 1, 2012 1 session March 26, 2012 1 session

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Hearing Dates: Nineteen (19) Hearing sessions @ $1,200.00/session

2 sessions 2 sessions 2 sessions 2 sessions 2 sessions 2 sessions 2 sessions 2 sessions 2 sessions 1 session

July 9, 2012 July 10, 2012 July 11, 2012 July 12, 2012 July 13, 2012 July 16, 2012 July 17, 2012 July 18, 2012 July 19, 2012 July 20, 2012

=$22,800.00

Total Hearing Session Fees = $28,200.00

1. The Panel has assessed $14,100.00 of the hearing session fees jointly and severally to Claimants.

2. The Panel has assessed $14,100.00 of the hearing session fees jointly and severally to Respondents.

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

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ARBITRATION PANEL

Donald N. Tolin - Public Arbitrator, Presiding Chairperson David L. Erickson - Public ArtJitrator Gene R. Thomton - Non-Public Artsitrator

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

Cpny^rrlnq Arbitrators' Signatures

Donald N. Tolin Signature Date Public Ariaitrator, Presiding Chairperson

David L. Erickson Signature Date Public Arbitrator

Gene R. Thomton Signature Date Non-PublteArbitiator

ice (For FiNRA Dispute Riesolution offic Date of Service (For FINRA Dispute Resolution office use only)

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ARBITRATION PANEL

Donald N. Tolin David L. Erickson Gene R. Thomton

Public Arisitrator, Presiding Chairperson Public Arbitrator Non-Public Arbitrator

I, the undersigned Arbitrator, do hereby affirm that I am the Individual described herein and who executed this instrument whteh is my award.

Concurring Arbitrators' Signatures

Donald N. Tolin Public Arbitrator, Preskiing Chairperson

David L. Erk^son Public Arbitrator

Signature Date

Signature Date

Gene R. Thomton Non-Public Arbitrator

Signature Date

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

FINRA Dispute Resolution Arbitration No. 10-04476 Awar^ Page 7 of 7

Donald N. Tolin David L. Erickson Gene R. Thomton

ARBITRATION PANEL

Public Arbitrator, Presiding Chairperson Public Arbitrator Non-Public Arbitrator

I. tiie undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instmment which is my award.

Concurring Arbitrators' Signatures

Donald N. Tolin Public Arbitrator. Presiding Chairperson

Signature Date

David L. Erickson Public Arbitrator

Gene R. Thomton Non-Public Arbib-ator

Signature Date

Signature Date

Date of Senflce (For FINRA Dttpute Resolution office use only)