An irreverent Wall Street Blog
by Bill Singer
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Former Schwab Employee Lost Defamation Arbitration But Employer Gets Slammed By Panel
Written: November 17, 2011

In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in July 2010, Claimant Johnson, representing himself pro se, asserted defamation, duress, intentional infliction of emotional distress, negligence and invasion of privacy as they related to a letter purportedly sent by Respondent Schwab to Claimant’s then current and now previous employer. 

Claimant sought $500,000 in compensatory damages; $10 Million in punitive damages; interest;  fees; costs;  and a “full letter of retraction to Claimant’s previous employer.” At the close of the arbitration hearings, Claimant added a request of an additional net award of $75,000 for four years of lost compensation William James Johnson, Claimant, vs. Charles Schwab & Co., Inc., Respondent (FINRA Arbitration 10-03164, November 11, 2011).

Respondent Schwab generally denied the allegations and asserted various affirmative defenses.

SIDE BAR: Given that I found the FINRA Arbitration Decision in this case to be vague as to the precise nature of this dispute, I communicated with Claimant Johnson in an effort to clarify some of the issues. 

Based upon Claimant Johnson’s explanations and the facts specified and implied in the FINRA Arbitration Decision (and a whole lot of inference on my part), it seems that Respondent Schwab sent two letters to a former and also to a then-current employer of Johnson. Apparently, Schwab complained in its correspondence about representations pertaining to the scope and nature of Johnson’s duties during his employment at Schwab.  Allegedly, Schwab  characterized Claimant’s online biographies and biographical blurbs in several of his published works as inaccurate and untruthful when it came to describing his role at Schwab; and Schwab requested that such marketing materials be removed from the former and current employers’ websites and hard-copy publications.  Claimant Johnson believed that the communications damaged his relationship with his then employer.

Round One: Sanctions

Claimant Johnson filed a Motion for Sanctionsalleging abuse of the discovery process by Respondent Schwab. Claimant asserted that Respondent Schwab had made

false statements to the FINRA Arbitration Panel and was recklessly seeking irrelevant information. Claimant further asserted that the majority of Respondent’s discovery production was marked “redacted” or “attorney-client privilege” and additionally, that Respondent was avoiding his discovery requests.

Respondent Schwab denied the discovery abuse allegations and countered that it was Claimant who was not cooperating and had not made an effort to resolve the discovery issues. The FINRA Panel denied Claimant’s Motion for Sanctions.

Round Two: Sanctions

Thereafter, Respondent Schwab filed its own Motion for Sanctions alleging that Claimant Johnson had failed to comply with a July 2011 Order from the FINRA Arbitration Chair. Claimant argued, among other things, that the information sought was irrelevant and outside the relevant time period. The Panel denied Respondent’s Motion for Sanctions.

One Last Shot

Thereafter, Claimant Johnson filed a Motion to Object to Respondent’s Supplemental Notices of Compliance, Witness Lists and Other Discovery. The Panel ultimately determined the motion to be moot and did not rule on it.


The FINRA Arbitration Panel found Respondent not liable on any of Claimant’s claims, but ordered Respondent to pay to Claimant the $600 refundable portion of his FINRA filing fee.

Okay, as they would say at the scene of a fender bender, nothing to see here, move on — except, the FINRA Arbitration Panel added this odd comment after ruling against Claimant Johnson:

The Panel wishes to note its view that Respondent’s investigation of Claimant’s biography was insufficient and incomplete by failing to contact either Respondent’s Orlando office or any of Claimant’s previous co-workers. We recommend that Respondent review its procedures to insure that in the future in similar circumstances that each and every statement taken together or standing alone, is accurate.

Bill Singer’s Comment

Ooooooooookay, ummm . . . what the Hell???

Seems to me that this whole dispute was about Claimant Johnson’s contention that Respondent Schwab sent out letters to a former employer and a current employer that he felt damaged his ongoing relationship with the latter and defamed him with both.  Claimant loses his case but the FINRA Arbitration Panel makes Respondent Schwab pay him $600 — and then the Panel admonishes Schwab that it’s “investigation of Claimant’s biography was insufficient and incomplete. . .”

For starters, why is the Panel requiring Respondent Schwab — the victor in this case — to pay $600 to the losing Claimant?  If you can make sense out of that, congratulations.

Then there’s the Panel’s shot against Schwab for undertaking an insufficient and incomplete investigation of its assertions.  Insufficient and incomplete as in wrong and damaging the Claimant? – or insufficient and incomplete as in no big deal?

Clearly, I’m not understanding what the Panel said or meant to say. Did the Panel find Schwab’s statements defamatory or not:  Simply going by the Decision, you’d have to say the Panel found no defamation but for the fact that the Panel is also chastising Schwab for not properly checking out the information upon which its letters were based.  Which sort of drives me crazy because I’m not understanding why an arbitration panel would complain about a given Respondent’s purported investigative sloppiness if the disputed statements were found to be accurate and not defamatory? 

On top of that confusion, I can’t even begin to wrap my arms around the point of the Panel’s adding that Schwab should ”review its procedures to insure that in the future in similar circumstances that each and every statement taken together or standing alone, is accurate. . .”  Does that mean that Schwab’s letter(s) contained some defamatory comments?  I’m still not getting why this Panel did not conclude that Schwab drafted letters based upon incomplete and inaccurate information, transmitted those flawed allegations to two third-parties, and, as a result, defamed Claimant Johnson.

All of which reminds me of a restaurant review that is glowing about the food and service, only to end with the critic giving the establishment one star out of a possible five.  You scratch your head.  You re-read the review. It doesn’t matter — you just can’t reconcile what was written with the rating.

Ultimately, Johnson v. Schwab seems to find that Claimant was defamed but dismisses his case.  I fully appreciate that such may be my personal inference and others may read this case differently, but I still don’t like this Decision.  Bending over backwards to be fair, the best that I will say is that this is a case the FINRA Arbitration Panel:

  • reached the right verdict but woefully failed to explain the facts and rationale;
  • reached the wrong verdict and woefully failed to explain the facts and its rationale; or
  • issued a Decision that will forever remain inexplicable and indecipherable. 

Regardless of which of the three bullet-points is correct, FINRA owes the industry and the public far more than a jig-saw puzzle with a missing piece.  As if you haven’t heard me voice that same complaint over and over and over again.


Previous Entries
July 2, 2015
Offered for your consideration today in the Blog is a thought piece. On one side, we have the goose: An individual human being conv... Read On
July 1, 2015
If you're going to promise a Wall Street regulator that you will fix a problem, you better make certain -- in fact, you better make damn cer... Read On
June 30, 2015
In "SEC Commissioner Gallagher Rages Against The Dying Light In Two Dissents" (, June 18, 2015), I noted that:After four years ... Read On
June 30, 2015
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS: Brok... Read On
June 29, 2015
On June 26, 2015, the Financial Industry Regulatory Authority ("FINRA") published this somewhat unusual and intriguing press release:FINRA Supports NA... Read On
June 27, 2015
BREAKING NEWS: Supreme Court Rules On Gay MarriageIn Obergefell et al. v. Hodges, Director, Ohio Department Of Health, et. al (Slip Opinion,... Read On
June 26, 2015
In Obergefell et al. v. Hodges, Director, Ohio Department Of Health, et. al (Slip Opinion, Supreme Court, No. 14–556; 576 U. S. ____ / June ... Read On
June 26, 2015
During my three decades on Wall Street (which has included stints as an industry regulator, industry defense lawyer, and public customers' lawyer), I'... Read On
June 25, 2015
You ever heard of PPAC Act -- a Congressional Act passed in March 2010?  That law is formally known as the "Patient Protection and Affo... Read On
June 25, 2015
If there is a hallmark of the Financial Industry Regulatory Authority's ("FINRA's") approach to Wall Street regulation, it is likely found in the se... Read On Job Search

Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Morgan Keegan Arbitration Counterclaim Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC Ponzi Affinity Fraud Wachovia Criminal Raymond James Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX FBI Banc of America Pro Se PCAOB Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax Email Netschi Moore Whistleblower Street Sweeper Countrywide Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade AIG Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Thain Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 Eligibility RRBDlaw 8210 Appeal Fowler LPL Johnson Cellphone US Airways JPM BrokeandBroker Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Rule 3050 Away Account Credit Repair PN Advisor Placement Group Fifth Amendment Forex Mortgage Private Placement Moon CGMI Failure to Supervise Merrill Anderson Exam Lee Borrowing Tax Lien Charity Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Deferred Compensation RIA Prison Disclosure NASAA Aguilar FCPA Subway Testimony Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital Retirement Due Process God HSBC Private Placements Eric Stein Wire Fraud FINOP CCO Compliance Audit Test Examination Cheating Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Series 7 Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud OBA Equity Indexed Annuities EIA Disability MetLife Continuing Education OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS AML PST Solicited Unsolicited Congress SRO Password Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Obamacare Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Practice Sale Unfair Competition Signature Judgments Data Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Commodities Fraud Sexist NML Argentina Embezzlement Silver Investor Alert Evidence Judgment Bank Fraud Deceased Bill Singer BrokeAndBroker TSSB OHO Leveraged ETF Mary Jo White Trustee FINRA AWC Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Commissioner Stein 401(k) Rule 3040 Customer Files Class Action Beneficiary NYAG Schneiderman 11th Circuit Insurance Gallagher White Self Regulation Short Sale Compromise Website Rule 2010 Check TRO Supervision Vacatur Remand SDNY Rule 12206 BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Confidential Inside Information Reg SP VA Leveraged ETFs Regulation SP Fees Cease And Desist Customer Rule 3270 Rule 3240 Annual Compliance Questionnaire OWB 2Cir Red Flags Payroll Stockbrokers ALJ Cybercrime Loans BrokerCheck Altered Records
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+