Principal Ordered to Pay $7.3M to Medical Research Foundation

FINRA sign

A Financial Industry Regulatory Authority arbitration panel has ordered Principal Securities to pay about $7.3 million in compensatory damages and interest to the Rosenau Family Research Foundation and three beneficiaries of two related trusts.

FINRA denied the claimants’ request for punitive damages, attorneys’ fees and other damages.

Principal Securities is a subsidiary of Principal Financial.

Paul Rosenau won a Powerball lottery in 2008 exactly five years after the days his 2-year-old granddaughter Makayla died from Krabbe disease, a rare genetic disorder. The Rosenaus discovered that a gene for cystic fibrosis also ran in the family, according to the foundation website.

Paul Rosenau received a lump sum payment of about $60 million. He and his wife, Susan Rosenau, used $26.4 million of the winnings to start the foundation, to support research on both Krabbe disease and cystic fibrosis. In 2023, for example, the foundation awarded grants to University of Illinois researchers who are trying to develop a gene therapy strategy for treating Krabbe disease.

The foundation and other claimants told arbitrators that a Principal advisor who died in 2020 caused them to invest in unsuitable variable annuities and unsuitable life insurance policies, and that high investment costs associated with the products were not disclosed.

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