Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in January 2015, and as amended thereafter, in connection with his termination of employment by Respondent UBS, Claimant Springer asserted wrongful discharge; negligence; intentional and negligent infliction of emotional distress; unjust enrichment; tortious interference with business relationships; unfair competition; civil conspiracy; fraud; defamation per se; breaches of good faith and fair dealing, and fiduciary duty; violation of FINRA Rule 2010; equity; and unpaid wages.
Claimant Springer sought compensatory, punitive, and statutory damages, attorneys' fees, and costs. At the close of the hearing, Claimant requested between $63,801,136.00 and $96,545,136.00 in damages, and he requested expungement of the "Reason for Termination" set forth in Section 3 of his Form U5 and that the answer to Question 7F(1) be changed from "YES" to "NO." In the Matter of the FINRA Arbitration Between James L. Springer, Jr., Claimant, vs. UBS Financial Services, Inc., Respondent (FINRA Arbitration 15-00100, October 26, 2017).
Respondent UBS generally denied the allegations and asserted various affirmative defenses.
In April 2016, Claimant filed a Motion to Clarify and Amend, opposed by Respondent, in which he sought to clarify that:
The FINRA Arbitration Decision states that Claimant apparently intended to clarify the U5 expungement issue in order to "prevent Respondent from manufacturing a claim of surprise or prejudice at the final hearing.
In June 2016, the FINRA Arbitration Panel granted Claimant's Motion to Clarify and Amend to include:
New Life Sought for Deadlines
Also in April 2016, Claimant filed a Motion to Set New Deadlines, opposed by Respondent, in which he alleged that Respondent had intentionally obstructed his right to Discovery. Respondent asserted that Claimant's misrepresentations of fact warranted the denial of his motion.
In June 2016, the FINRA Arbitration Panel denied Claimants Motion to Set New Deadlines and requested sanctions.
The FINRA Arbitration Panel found Respondent UBS liable on the claim of defamation and ordered it to pay to Claimant Springer $3 million in compensatory damages plus interest from the date of the Award until paid in full.
The Panel denied Claimant's requests for expungement of the "Reason for Termination" from Section 3 of his Form U5 and Question 7F(1).
Bill Singer's Comment
It's not everyday that a FINRA Arbitration Panel awards $3 million in damages to a registered rep, so this is a fairly substantial sum notwithstanding Claimant Springer's larger demands. Similarly, consider that the damages were awarded solely for "defamation," so that must have been one helluva nasty bit of commentary posted by UBS.
It's impossible to figure out just what the Panel deemed defamatory because no such language was cited in the FINRA Arbitration Decision. As I frequently concede, there may well be merit in the arbitrators' opaque approach because presenting the contested language in a Decision when there is a finding of defamation tends to doubly victimize the former employee. Since the arbitrators declined the requested expungement of Springer's Form U5, whatever UBS posted in that document and whatever will remain on BrokerCheck may pose ongoing issues for Springer.
MR. SPRINGER WAS DISCHARGED AFTER HE ACKNOWLEDGED THAT FOR SEVERAL YEARS, HE HAD CAUSED CHARGES ON HIS CORPORATE CREDIT CARD TO BE CHARACTERIZED INACCURATELY SO AS TO PORTRAY CERTAIN OF HIS PERSONAL EXPENSES AS BUSINESS EXPENSES IN ORDER TO GET BACK FUNDS SET ASIDE FROM HIS OWN PRE-TAX EARNINGS TO PAY FOR BUSINESS EXPENSES; NO CLIENT ACCOUNTS WERE HARMED. THE FIRM ALSO CONCLUDED HE GAVE UNSATISFACTORY ANSWERS TO FIRM MANAGEMENT REGARDING MULTIPLE CLIENT EVENTS AND THE FIRM'S NON-CASH COMPENSATION POLICY.
By way of the "inside game" of intra-industry arbitration disputes adjudicated before FINRA, consider the following fees. If you thought that arbitration was a "cheap" alternative to court, think again. Which is NOT to suggest -- not even remotely -- that there aren't considerable costs involved in litigating in the courts. There are. The following disclosure is simply intended to disabuse any future FINRA Arbitration litigants of the folly that the self-regulatory-organization is offering a free, charitable forum. It is not.
In addition to Claimant Springer's $1,575 Initial Filing Fee, and Respondent UBS's $1,900 Member Surcharge and $3,750 Member Process Fee, the FINRA Arbitration Panel calculated the following $$66,600 in fees for pre-hearing and hearings sessions:
The above fees were assessed against the parties by the Panel as follows: