November 23, 2015
You've been fired and you are not happy about it. Not at all. It was a set-up. It was an effort to force you out and jerk you around. And on top of all of that, your former firm jammed you up with a regulatory filing suggesting that you may have done something wrong -- as in bad, as in a violation of industry rules and regulations. Angry and outraged, you nonetheless try to get on with your life and career by applying to other brokerage firms. Then, things go from bad to worse. Your former employer's words on the regulatory filing about your termination are coming back to haunt you -- think The Walking Dead. That's the last straw. You hire a lawyer, pay the legal fees and costs, gird for battle, and come out swinging when the bell sounds. You were warned by your lawyer, however, that these employment disputes don't generally end well for former employees. Still, your reputation and career are pretty much in the crapper at this point. What do you really have to lose?
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2014, registered representative Respondent Petersen alleged that her former employer, Respondent Allianz Life, had misrepresented the reasons for her termination on her Uniform Termination Notice for Securities Industry Registration ("Form U5"); and falsely claimed she was terminated for violating investment-related statutes, regulations, rules or industry standards of conduct. In addition to seeking an expungement, Claimant Petersen sought over $100,000 in compensatory damages, punitive damages, interest , attorneys' fee, and costs. In the Matter of the FINRA Arbitration Between Michelle Petersen, Claimant, vs. Allianz Life Financial Services, LLC Respondent (FINRA Arbitration 13-02569, November 13, 2015).
SIDE BAR: Although not fully disclosed in the FINRA Arbitration Decision, according to online FINRA BrokerCheck records as of November 23, 2015, Petersen was first registered in 2003 with Allianz Life. On March 27, 2012, Allianz Life Financial Services LLC "Discharged" Petersen based upon allegations of:
LOSS OF CONFIDENCE DUE TO VIOLATION OF CODE OF CONDUCT, COMPANY GIFT & ENTERTAINMENT POLICY AND TRAVEL & ENTERTAINMENT POLICY AND PROCEDURES REGARDING PROPER SUBMISSION OF EXPENSE
Respondent Allianz generally denied the allegations and asserted various affirmative defenses.
The FINRA Arbitration Panel found Respondent Allianz Life Financial Services, LLC liable and ordered it to pay to Claimant Petersen $120,000 in compensatory damages.
Having found evidence of defamation, the Panel recommended the expungement of the "Reason For Termination" on Claimant Petersen's Form U5 and urged that the explanation be "Other." Further, the Panel recommended that the "Termination Explanation" on the Form U5 be changed to "due to unsatisfactory performance not investment or sales practice related." The Panel also recommended further conforming changes to the Form U5 and the deletion of corresponding Disclosure Reporting Pates.
Bill Singer's Comment
Although not set forth in the FINRA Arbitration Decision, the language in Petersen's BrokerCheck records (which will likely be altered to conform with the Panel's award) presents the circumstances of her termination as flowing from Allianz's supposed "loss of confidence" that purportedly arose from the employer's contested finding that Petersen had violated several of the firm's policies and its Code of Conduct in terms of properly submitting expenses. As a result of going the expungement arbitration proceeding, the explanation of the termination will likely be altered to "unsatisfactory performance."
Was it worthwhile to spend the legal fees and generate the publicity attendant to this expungement arbiration? That's a thorny question. As a lawyer who has reviewed such Form U5 language for a broker-dealer client or within the counseling context for a registered person, I think the recommended alteration was well worth the costs and Petersen emerges from this fray with a victory, albeit a somewhat qualified one.
The "narrative" with which Petersen had to contend was that her former employer asserted that she had violated the firm's Code of Conduct and various expenses policies. For many folks in Compliance or Human Resources, such an assertion is pregnant with invitations to infer what may "really" have transpired. It's not so much what is said as what is unsaid that can derail a job application from someone in similar standing to Petersen. Once the gears start turning, it is inevitable that many industry participants will begin wondering whether someone with such a write-up was caught trying to "steal" from the firm? From there, it only fosters even worse ruminations: Was this about merely "submitting" for expenses or did she get paid? How much was submitted in "bogus" expenses: hundreds or thousands of dollars? Did the employer sanitize this situation in an effort to get rid of an employee with even deeper issues? And so it goes . . . one unanswered question gives rise to another and brick by brick by brick you build a wall of supposition and inference that may well be based upon fiction and falsehood . . . or, hmmmm, maybe not?
By having taking this battle back to her former employer, Petersen may have reclaimed much of the narrative concerning her termination. An impartial panel of arbitrators heard both sides of the issue and concluded that Petersen's termination is best characterized as having been based on mere "unsatisfactory performance" and not on those inflammatory allegations of improper expenses. Then there's that final fillip from the Panel, that the termination had nothing whatsoever to do with an investment or sales practice, which means that we're not talking churning or a customer complaint or customer losses or anything that might raise red flags or sound alarms.