An irreverent Wall Street Blog
by Bill Singer

Wanton Disregard Cited In FINRA Raiding Arbitration

October 27, 2016

When BrokeAndBroker.com Blog publisher Bill Singer gets frustrated, he gets hungry. Today, Bill is very frustrated with an intra-industry FINRA arbitration. The dispute set up as a fairly interesting one involving allegations of unfair competition and raiding. In addition to the usual former employer versus former employee parties, we also have the new employer cast in the role of possibly aiding and abetting its new employee's misconduct. On top of everything, the arbitrators really, really, really didn't like some of the respondents actions, which the arbitration panel slammed as "wanton disregard." Unfortunately, just when we thought we were going to get a nice morsel to chew on, the FINRA Arbitration Decision leaves us hanging. That got Bill's stomach acids working overtime. Fact is, he's got a dying urge for Wonton Soup.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2015, Claimant BMO Harris Financial Advisors, Inc. asserted:
  • breach of contract; 
  • unfair competition and raiding; 
  • tortious interference with contracts between Claimant and its customers, with business relations, and with prospective economic advantage; 
  • breach of duty of loyalty; 
  • aiding and abetting breach of fiduciary duty of loyalty; and 
  • tortious interference with contract. 
That above laundry list of causes of actions clearly alerts us that the parties are in a gladiatorial fight to the death. The business folks involved in fomenting this crap should know better but they rarely do; and the lawyers that they hire loooooooove this stuff since it's often a massive hourly fee. Ave Imperator, morituri te salutant.


Claimant BMO alleged that after Respondent Moscicki resigned on July 31, 2015, he violated his employment agreement's non-compete covenant when he began contacting all of the customers he had previously served while employed with BMO. Further, Claimant alleged that "in exchange for a large share of the transfer of these clients," Respondent Wintrust offered Respondent Moscicki a substantial forgivable loan. As of November 2015, Claimant alleged that Respondent Moscicki had solicited the transfer of a large amount of assets from Claimant BMO to Respondent Wintrust. Claimant sought unspecified compensatory and punitive damages, fees, and costs. In the Matter of the FINRA Arbitration Between BMO Harris Financial Advisors, Inc., Claimant, vs. Wayne Hummer Investments, LLC, d/b/a Wintrust Wealth Management and Neil Moscicki, Respondents (FINRA Arbitration 15-02080, October 11, 2016).

Respondents requested the dismissal with prejudice of Claimant's claims 

Injunction

Following four hearings in September and October 2015 on Claimant's Request for a Permanent Injunction, the FINRA Arbitration Panel imposed a Permanent Injunction. Unfortunately, the FINRA Arbitration Decision does not provide us with the parameters of the Permanent Injunction.

Award

The FINRA Arbitration Panel found Respondent Wayne Hummer Investments, LLC, d/b/a Wintrust Wealth Management and Respondent Neil Moscicki jointly and severally liable and ordered them to pay to Claimant BMO Harris Financial Advisors, Inc. $1,025,000.00 in compensatory damages and $512,500 in punitive damages. The arbitrators issued such an Award "based on the wanton disregard for the rights of Claimant."

Bill Singer's Comment

Of for godsakes . . . really? FINRA actually allowed this Decision to be issued with so much content and context missing? 

I mean, c'mon, if you're going to award over $1.5 million in damages (of which there is a $500,000 punitive component) and also find that respondents engaged in "wanton" disregard for a claimant's rights, howsabout you offer some meaningful content and context. There is virtually no explanation of the calculation that produced the roughly $1 million in compensatory damages. Moreover, you'd sort of think that there would be some rationale provided as to why the arbitrators tacked on another $500,000 in punitive damages -- and don't tell me it's because they found the misconduct to be "wanton" because that's simply circular reasoning. What conduct added up to not mere disregard for Claimant's rights but wanton disregard? 


As you likely can tell, I am infuriated by this FINRA Arbitration Decision. The facts at issue are frequently litigated in intra-industry disputes and it would help future litigants (and possibly promote settlements) if arbitrators published sufficient commentary so that the industry better understood the deliberative process and how the competing points were weighed.  The momentous nature of the dollars awarded should have prompted something more than X alleged this, Y alleged that, and we find Y engaged in wanton disregard.

Also See:

"FINRA Arbitrators Enjoin Brokerage Raid And Enforce Non-Compete" (BrokeAndBroker.com Blog, January 18, 2012)

Permalink

Search BrokeAndBroker

Related Topics

Previous Entries

Tag Cloud

Bill Singer BrokeAndBroker FINRA Arbitration AWC SEC BrokeAndBroker.com Employment Expungement Street Sweeper Jobs Bill SInger Fraud Wells Fargo Promissory Note OBA Email Wire Fraud U5 Forbes U4 FBI Merrill Lynch UBS EFL Elderly Ponzi ALJ Citigroup Borrowing Outside Business Activity Morgan Stanley Statutory Disqualification OIP Rule 3270 PST Suitability Defamation IRS Wachovia Whistleblower Bank Mail Fraud Supreme Court Felony Form U4 BrokerCheck Wrongful Termination DOJ Supervision Employment Tuesday Insider Trading BrokerAndBroker Madoff Expenses Forgery Bankruptcy SDNY Checks NAC Conversion Form U5 Raymond James CCO CRD RIA Indictment Willful Rule 3040 Credit Card Dodd Frank Punitive Damages IRA Street Legal Ameriprise Private Securities Transaction Exam Facebook Rule 3240 Real Estate Guest Blog Case In Point LPL Settlement Rule 2010 Schapiro Wall Street Impersonation NYSE Bank of America JP Morgan Commissions Antitrust Power of Attorney ATM Tax Lien Bar Rule 8210 Goldman Sachs Wife Schwab Appeal Annuities Discretion Wire Outside Business Activities Mortgage WSP Discovery OHO Business Expenses ETF Promissory Notes Tax SRO Rule 1122 Offer of Settlement Securities Fraud Test NASAA Employee Forgivable Loan Tax Liens Misdemeanor Pro Se Stephen Kohn NSF Estate Husband Edward Jones Cease And Desist Spouse Chase NASD ARS Conspiracy Due Diligence Initial Decision Money Laundering HFT Signatures Signature Flash Crash Loan 2Cir Huffington Post Lien Small Firm LOA Corrective Action Statement NASDAQ Credit Cards Trust Liens Complaint Registered Rep Magazine POA Fidelity MSSB Hacker Trustee Gallagher RRBDLAW.com Bharara Barclays E*Trade Away Account Forex FINRA Arbitration Continuing Education DCCir Bonus Letter of Authorization email Injunction CFTC Lehman Brothers RBC Malware employment Rule 2080 Annuity VA Margin jobs Annual Compliance Questionnaire Deutsche Bank PCAOB LIBOR arbitration 2nd Circuit Identity Theft Variable Annuity Beneficiary Wedbush Mandatory Arbitration Remand Second Circuit RRBDlaw.com Failure to Supervise Telephone Private Placement Hacking Wey Away Accounts Solicitation OTR FOREX JPMorgan Undisclosed Settlement IC3 Willfulness Reg SP Fiduciary Rule 3010 Prison Bureau of Prisons Judgments Social Media BOP Stockbrokers Trading Platform Website 10Cir Plea OWB Self Regulation Rule 3050 Auction Rate Securities Rakoff Insurance Unauthorized Trading Scottrade Hedge Fund NYAG Rule 2510 Eligibility Rule Registration Piwowar Knight Retirement Compliance RMBS Cheating MetLife Private Securities Transactions Net Capital China Apple Audit T&P BrokeAndBroker Bill Singer Dissent brokeandbroker Great Recession Unfair Competition Internet Will Obstruction of Justice Willfully Khuzami Morgan Keegan Discrimination TRO Aleynikov Hurry MF Global Commission Solicited ADA Variable Annuities Phishing Retaliation PN Wine Article V Raiding Confidential Rule 12206 Medicare SAC Examination Unauthorized Discretion Woody Allen Ketchum Customer Complaint Crowdfunding Affinity Fraud EIA Joshua Brown Check Kiting Reg D Divorce Vacatur IAR Guest Blogger Lehman Regulation SP Rule 3280 Banc of America Brummer Confidential Information Gold Passcode Shah Gilani Protocol Options McDuff Morgan Stanely Smith Barney Rule 12805 Wire Transfer Unregistered CE Poteroba Fees Parking JOBS Act Chief Compliance Officer Charles Schwab Series 7 Online Unsolicited Confirm Laptop Disgorgement Rule 2111 Pennystock Rule 4511 Casino Termination BrokeandBroker Corzine Deferred Compensation Pennystocks Aguilar Eligibility Disclosure Side Bar Vault ING REIT Broker Protocol Bank Fraud Embezzlement Sexist Sales Assistant Charge Rosenthal Recruiting Debit Card HSBC Spouses FINOP Information Failure To Supervise Customer Kon Newman Lucia Bandimere PNC Guest Bloggers Sexism 6th Circuit Corruption bill singer BrokeAndBroker Reg S-P Time And Price Bid Rigging Private Placements Check OIG Employment Agreement Marketplace High Frequency Trading NPR Penson IPO Executor Finder\'s Fee White Bloomberg Bear Stearns Stanford Day Trading USERRA Morgan Stanley Smith Barney Waiver Dell Reverse Life Insurance Netschi Conflict Hearing FINRA AWC Motion to Dismiss FNMA Moore Female Class Action 40 Act Imposter Inside Information Christian Stanley Rule 9216 Registered Investment Advisor Stifel OCIE FCI Beaumont 9Cir Severance Customer Information TIC Charity Compensation Unjust Enrichment TSSB Leveraged ETF Fifth Amendment Layering David Sobel RRBDlaw Burris Spoofing Credit Suisse Personal Expenses Small Firm Governor Rule 3030 Appointments Clause Rule 4530 401k Consent Order 401(k) FCI Broke And Broker Testimony Oppenheimer Chase Investment Services TheBlot Scholander Non-Solicitation Tax Fraud Disability Sanction Guidelines Moon Commodities Fraud Marines ACQ Argentina CGMI BrokerAndBroker.com Reimbursement Administrative Remedies Vietnam Judgment 11th Circuit Rule 1031 Timban Florida Marine Corps Fowler Loans CNBC Outside Account Scottsdale Due Process Department of Justice SP Taft Correctional Institution Hospital Elles Written Supervisory Procedures Mutual Fund Schneiderman Stockbroker WaMu Ride the Thunder Teleconference Sanctions Investment Adviser Gusrae Kaplan Testing Third Party Vendor Affiliate Botkin Unauthorized Practice of Law Stay Backstage Wall Street Lawyer Red Flags AML CPA Do Not Call Rule 2370 Restaurant Lincoln Financial Client Information Deceased Statute of Limitations Board Frumento Equity Indexed Annuities Postponement Obamacare Theft Altered Records Mary Jo White Customer Files 8210 Kiting Bribe signature Wells Fargo Advisors Password Lee Checking Death 1Cir Evidence Lek Leveraged ETFs Commodities iPhone Outside Accounts Trainee Fee Spam Congress Laser DWI Gabelli Silver Books And Records Dementia Short Sale Test Center Varney Boyland Settling Away Motion To Dismiss Payroll Kennedy Expense Fee Flash Drive Fiduciary Duty DOL Pacifico CRS Personal Information Exhaustion Doctrine Money Market Non-Prosecution Agreement NML Circuit Court FTC Goble Reform Costa Rica Unsuitability Retired Woman With Cane Tennis Court Walter RRBDLAW Mattera FDA Compliance Questionnaire Reuters Enforcement Executrix Self Regulatory Organization 9th Circuit Diabetes Dow Thain Schumer Investor Alert Arrest Commissioner Stein BrokeAndBroke Compromise Elder Abuse Form ADV Proctor Fiero Fines Widow Permanent Bar EDNY Wanger Aegis Frumento Sexual Harassment Preet Bharara Murray Jurisdiction Arbitraiton Chiasson Public Interest Branch Manager false statements Falsification Negligence Koval Stock Promotion Prime Bank FCPA Reverse Merger Rule 12200 VIX VXX TD Ameritrade Kenneth Starr Resignation Andrew Wels Naskovets Broy Disparate Treatment Eric Stein Research Sexual Discrimination SunTrust Advisor Placement Group FOCUS Explained Decision FINRA Board expungement Euro Escrow Summary Judgment Sharing Agreement Rule 2081 Bank Guarantee McCartney Spoliation Selling Away Trader Tran Countrywide House Financial Services Subway CDO Elder Fraud BBVA Undercover Credit Repair BitTorrent Mother Joint Account Bill Singer BrokeAndBroker Skimming Hertz Retroactive Bar Google Galleon Municipal Advisor Collateral Bar Tortious Interference Retroactive FNI Media US Airways Rule 9552 Books and Records NYG Capital Cellphone Data Obstruction Counterfeit Nasdaq Counterclaim Immunity Accounting Initials Bartko NRSRO Martin Johnson Electronic Communications Criminal David Lerner Rule 13200 1099 CEO Bonds Merrill Inmate BrokeandBroker.com BATS Brokeandbroker.com God Investment Advisor Undertaking Texas State Securities Board Wages Anderson Attorneys Fees AIG Practice Sale AXA Cybercrime Impersonator Mutual Funds SIPC JPM Motion