February 23, 2012
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2010, Claimant Rebecca Vandusen asserted that Chase Investment Services Corporation (herein, the "Respondent") and JP Morgan Chase & Co. had defamed her and had engaged in a retaliatory discharge on May 5, 2009. Vandusen sought unspecified monetary damages and an expungement of her industry record. In the Matter of the FINRA Arbitration Between Rebecca Vandusen, Claimant, vs. Chase Investment Services Corporation and JP Morgan Chase & Co, Respondents (FINRA Arbitration 10-02143, February 14, 2012).
Claimant Vandusen alleged that she was involved in an incident where a co-worker had physically assaulted and falsely imprisoned her. Following her complaint to Respondent Chase, Claimant alleged that she was told the matter was petty and that she should work it out with the co-worker. As a result of her complaint, Claimant alleged that she was transferred to a different location.
Additionally, Claimant alleged that in March of 2009, her brother applied for a car loan with Respondent Chase and because the loan processor was absent, Claimant was instructed to assist with the closing. Claimant alleged that she asked another co-worker to perform the closing. According to Claimant, that co-worker failed to properly notarize the loan documents, in violation of Respondent's policies and Illinois law.
Respondent Chase apparently discharged Claimant because of her alleged role in the the loan incident but the co-worker who failed to properly notarize the documents was not. Citing the inconsistency of terminating her employment but not that of the purportedly culpable co-worker, Claimant Van argued that, in reality, her former employer's had used the loan incident as a mere pretext for firing her and that the real reason for her discharge was the complaint that she had previously made about the assault.
Respondent generally denied the allegations and asserted various affirmative defenses.
JP Morgan Chase & Co., is not a member of FINRA and did not voluntarily submit to arbitration. Therefore, the Panel made no detemiination with respect to Claimant's claims against that company.
The FINRA Arbitration Panel found Respondent Chase Investment Services Corporation liable and ordered it to pay to Claimant Vandusen $200,000 in compensatory damages. Also, the Panel recommended the expungement of the "Termination Explanation" and conforming changes to other sections on Claimant's Form U5 dated June 4, 2009, to indicate only that she had been discharged by Respondent's affiliate bank for non-securities related matters. Essentially, the U5 description would be:
TERMINATION BY AFFILIATE BANK-NON SECURITIES RELATED.
Bill Singer's Comment
I was trying to figure out what warranted the award of $200,000 and just wasn't picking up that motivation from the provided facts; however, when I did a bit of my own investigation and found the full text of the defamatory explanation, I understood the result. According to online FINRA records as of February 22, 2012, this incident is disclosed as a "Discharge" by JPMCHASE BANK on 05/05/2009 with the "Allegations" noted as:
TERMINATION BY AFFILIATE BANK-NON SECURITIES RELATED. REGISTERED REP VIOLATED THE FIRMS CODE OF CONDUCT BY CLOSING AN AUTO LOAN FOR A FAMILY MEMBER. IN ADDITION, REGISTERED REP PROVIDED INACCURATE INFORMATION ON THE LOAN DOCUMENTS TO GIVE THE APPEARANCE THAT SHE DID NOT CLOSE THE LOAN.
Given that text, we now have a more meaningful context with which to judge the significant proposed language revision by the FINRA Arbitration Panel. It might have been helpful if the FINRA Arbitration Panel had fully set forth the offensive language above in the Decision rather than merely indicate the recommended substitution.
Although it is merely my speculation, it appears that the Panel believed Claimant Vandusen's contention that her discharge was based upon the pretext of the defamatory allegations that she had violated Respondent's policy by authorizing a car loan to her brother and then intentionally included information on the application to hide her involvement. If Claimant's version of the truth was accepted by the Panel, she did not voluntarily assume the role of closing the loan but was instructed to assist in light of the loan processor's absence. Further, Claimant apparently felt uncomfortable assuming the responsibility as the sole employee involved in closing her brother's loan and she asked a co-worker to help out.
These defamation and retaliatory discharge cases are a fairly common basis for Wall Street arbitration complaints, particularly at firms that are affiliated with a bank, such as Merrill Lynch, Citi, and Wells Fargo. Frankly, this isn't a situation that's unique to Wall Street and the fact pattern is common for all industries.