It starts off in relatively ho-hum fashion. A broker-dealer sues a former employee over the balance due on a promissory note. Then, it takes a bit of a wild turn when the employee counterclaims and raises allegations of harassment and discrimination based upon sex and sexual orientation. In the end, we have a decision, we have multiple awards, but we're left scratching our heads as to how we got from Point A to Point B.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in October 2013, Claimant Stifel Nicolaus alleged that Respondent Sick had breached the terms of a promissory note dated December 9, 2008 ("the Note"). Claimant Stifel Nicolaus sought the $258,676.01 principal due on the Note, interest, attorneys' fee, and costs. In the Matter of the FINRA Arbitration Between Stifel, Nicolaus & Co., Inc., Claimant/Counter-Respondent vs. Penney Renee Sick, Respondent/Counter-Claimant/Third Party Claimant vs. James Eugene Wohlford, Third-Party Respondent (FINRA Arbitration 13-03576, July 8, 2015).
Sick generally denied the allegations, asserted various affirmative defenses, filed a Counterclaim against Stifel Nicloaus, and filed a Third-Party Claim against Wohlford. Sick asserted the following causes of action, which purportedly arose during her employment with Stifel Nicolaus and during her working relationship with Wohlford:
Sick sought back- and front-pay, punitive damages, interest, attorneys' fees, and costs.
The FINRA Arbitration Panel denied Sick's statutory discrimination claims and her Third-Party Claim against Wohlford. The Panel found:
The above resulted in a net award to Sick from Stifel Nicolaus of $115,923.97.
Additionally, Stifel Nicolaus is liable and ordered to pay to Sick $31,030.77 in costs.
Bill Singer's Commentary
Let's briefly recap the trail of the damages claims. Stifel Nicolaus initiated the arbitration with a claim for nearly $259,000 in a principal balance due on the Note plus interest, costs, and fees. That prompted Sick's Counterclaim seeking pay, damages, interest, costs, and fees. When all the dust settled, Sick wins about a $116,000 plus roughly $31,000 in costs -- for a net total of $147,000, of which you also need to factor in attendant legal fees, costs, and expenses. Sort of makes you wonder whether this lawsuit could have (or should have) been settled years earlier.
Then there's the whole question of just what the hell the discrimination and harassment allegations involved. Moreover, even taking into account that the FINRA Arbitration Panel denied Sick's discrimination claims and all of all claims against Wohlford, you're left to wonder why the Panel awarded over $232,000 to the former employee. That's not a paltry sum. Was Sick harassed? If so, what were the pertinent facts? If the award was not predicated on the harassment charges, then what exactly provided the basis for the six-figure award? I believe that the Decision owed Sick at least some expression of the arbitrators' rationale and, even more critically, owed that consideration to other industry employees who might be facing similar conditions at Stifel Nicolaus or other industry member firms.
Some would argue -- and I concede the merits of the point -- that FINRA Arbitration is largely intended to be a private, alternative dispute process. Where I take issue is over how "private" these industry arbitration are and whether the privacy issues are largely designed to preserve and protect member firms more so than public customers or industry employees. Keep in mind that FINRA publishes the Decisions on a publicly accessible, online database, which hardly comports with traditional notions of privacy.