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Employee Wins U5 Wrongful Termination / Defamation FINRA Arbitration
Written: August 16, 2011

In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in May 2010, Claimant VanAssche alleged wrongful termination and defamation on her Form U5 as a result of allegations relating to her participation (if any) in a continuing education cheating scam. In the Matter of the FINRA Arbitration Between Renee P. VanAssche, Claimant/Counter-Respondent vs. Lincoln Financial Distributors, Inc., Respondent (FINRA Arbitration 10-02482, August 9, 2011). 

Respondent Lincoln Financial generally denied the allegations and asserted various affirmative defenses. 

According to FINRA regulatory documents not fully referenced in the Arbitration Decision, Respondent Lincoln claimed  that it had terminated Claimant VanAssche on June 1, 2009, after an internal investigation and interview determined that a wholesaler had created an answer key for a state Long Term Care Continuing Education (“LTC CE”) online exam and provided the key to individuals. In response to that regulatory filing, VanAssche stated that “I was let go from Lincoln for following Lincoln Management instructions & created an answer key for the LTC CE. There have been no findings at this time.” 

The FINRA Arbitration Panel found Respondent Lincoln liable to and ordered the firm to pay to Claimant VanAsche $60,000 in compensatory damages but declined to recommend an expungement. 

Bill Singer’s Comment

Quite the frustrating FINRA Decision.  I report it because it’s always noteworthy when an industry employee sues a former industry employer alleging defamation and/or wrongful termination and wins. Moreover, here the award of some $60,000 is more than a de minimis sum.  However, none of those considerations outweigh the vague and uninformative nature of the Decision, its cursory explanation of the underlying facts, and its lack of any offered rationale. 

Left largely to speculation and inference, it seems that Claimant VanAssche was terminated based upon her employer’s allegation that she wrongfully participated in the preparation of the LTC CE answer key — and her former employer apparently implied that it was shocked to learn of her role in preparing the key.  Similarly, it appears that VanAssche argued that whatever her employer alleged she did wrong, she did in response to instructions from the employer. 

As best as I can tell, VanAssche charged Lincoln Financial with gross hypocrisy and perhaps argued that the U5 explanation was defamatory because it failed to explain that she had merely done what her employer had instructed her to do.  Put another way, this sort of smacks of the famous scene in the movie Casablanca where Captain Louis Renault closes down Rick’s with the admonition that “I’m shocked, shocked to find that gambling is going on in here.” However, just as the good Captain makes that pronouncement, he is handed his casino winnings. 

Alas, guessing games may be the stuff of children’s play dates but they should not be the substance of FINRA Arbitration Decisions.  It’s rare enough when an industry employee wins a defamation/wrongful termination arbitration — and when that is the outcome, FINRA Arbitration Panels should feel compelled to provide us with adequate details and explanations.   The decision in this case is little more than a jigsaw puzzle with too many missing pieces.


 
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