Firms Seek Injunction Against Customer Solicitation

March 3, 2014

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in January 2012, Claimant CCO Investment Services and RBS Citizens asserted 
  • breach of contract, 
  • breach of fiduciary duty, 
  • misappropriation of trade secrets and confidential information, 
  • unfair competition, 
  • tortious interference, 
  • unjust enrichment, 
  • action on promissory note, and
  • breach of promissory note as contract. 
Ultimately, Claimants sought the following relief from the FINRA Arbitration Panel:
  • An Order compelling Respondent McDermott to return to Claimants documents in his possession; 
  • An Order enjoining Respondent McDermott from soliciting customers;
  • An Injunction against Respondents from misappropriating confidential information or trade secrets;
  • $191,403 in  compensatory damages related to the solicitation and misuse of confidential information and attorneys' fees, and 
  • $34,000.00 remaining on the promissory note plus interest and attorneys' fees.
In the Matter of the FINRA Arbitration Between CCO Investment Services Corp. and RBS Citizens, N.A., Claimants, vs. Wells Fargo Advisors, LLC and Douglas J. McDermott, Respondents (FINRA Arbitration 12-0.0137, February 21, 2014).

SIDE BAR: According to online FINRA records as of February 28, 2014, during the relevant times, McDermott was registered with CCO Investment Services Corp.from 2009 to 2011; with Wells Fargo Advisors, LLC from December 2011 through February 2013. 

Respondent Wells Fargo Advisors and Respondent McDermott generally denied the allegations and asserted various affirmative defenses. 

On September 6, 2013, Claimants notified FINRA that this matter was settled against Respondent Wells Fargo Advisors, LLC.


The FINRA Arbitration Panel found Respondent McDermott liable and ordered him to pay Claimants:
  • $34,000.00 in compensatory damages for the balance of the promissory note, plus 7.64% per annum interest from February 7, 2014, until the award is paid in full.
  • $6,678.00 in accrued interest
  • $3,450.00 in attorneys' fees as provided by the terms of the promissory note;
  • $1,000.00 FINRA filing fees.
Bill Singer's Comment

Adding up the Panel's monetary sanctions, Respondent McDermott walks away from the arbitration owing about $45,000, essentially the balance due on his promissory note plus interest and attendant fees.  Keep in mind that Claimants sought about $225,000, two orders, and an injunction.  Doing the rough math, McDermott wound up paying about 20% of the monetary damages sought and totally avoids having to return any documents or cease soliciting customers.  Just using those metrics, Respondent appears the winner.

Also READ: "Former Domestic Partner of Stockbroker Gonna Getcha" (, January 22, 2014).