January 11, 2018
An industry veteran takes on her former FINRA member firm in an effort to clear her name. She put on quite the battle and is not only to be complimented for waging the good fight but also for coming away from the fray with a nice chunk of change. For those who say that you can't beat your former employer, consider today's featured FINRA intra-industry arbitration.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2015 and as amended thereafter, Claimant Hunnewell asserted violation of Rule 2010; wrongful termination; defamation; unjust enrichment; breach of fiduciary duty; and discrimination based on age in connection with her termination by Respondent Park Avenue Securities and the filing of Uniform Termination Notices for Securities Industry Registration ("Forms U5"). Claimant Hunnewell sought compensatory and punitive damages, costs, fees, and the expungement of the information contained on her Form U5. In the Matter of the FINRA Arbitration Between Beverly B. Hunnewell, Claimant, vs. Park Avenue Securities LLC, National Planning Corporation, Jeffrey Newman, and Sarah Burns, Respondents (FINRA Arbitration 15-01399, January 9, 2018).
Respondents Park Avenue, Burns, and Newman generally denied the allegations and asserted various affirmative defenses.
Respondent National Planning Corporation is not a member of FINRA, did not voluntarily submit to arbitration, and, accordingly, the FINRA Arbitration Panel made no determination with respect to Claimant's claims against this party.
Motion for Sanctions
In August 2016, Respondent Newman filed a Motion for Sanctions against Claimant Hunnewell wherein Respondent asserted, among other things, Claimant's failure to comply with the Chairperson's April 2016 Order dated directing Claimant to produce her federal tax returns from 2000 to the present. Claimant responded that her tax returns are irrelevant because the arbitration is not one involving a public customer. Notwithstanding her objection, in an effort to comply with the Chairperson's Order, Claimant offered to produce the tax returns back to the year 2010. In reply, Respondent Newman requested that Claimant be directed to complete and submit IRS Form 4506T- EZ, in order to obtain copies of the additional tax returns from the IRS. In September 2016, the FINRA Arbitration Panel issued an Order granting Respondent Newman's Motion and directing Claimant to produce pages 1-2 of her tax returns for years 2007 through the present, and sanctioned Claimant by assessing against her the cost of the telephonic pre-hearing conference.
Motion to Strike
Among the other motions made during the case, in February 2016, Claimant Hunnewell filed a Motion to Strike Respondent Newman's Amended Witness List for failures to comply with FINRA Rules, comply with the pre-trial Order, and be timely filed. In his Response, Respondent Newman stated that he served his amended witness list exactly 20 days before the rescheduled hearing date; he had no reason to hire an expert witness to rebut a damage calculation prior to receiving Claimant's damage exhibits; and that precluding a party from presenting a witness who has been identified in a timely manner would be extremely prejudicial. In March 2017, the FINRA Arbitration Panel granted Claimant's Motion.
The FINRA Panel of Arbitrators found Respondents Park Avenue and Newman jointly and severally liable on the count of defamation and ordered them to pay to Claimant $140,000.00 in compensatory damages and $475 in reimbursed filing fees.
The Panel denied all other claims and found Respondent Burns not liable on the count of defamation.
Is this a FULL TERMINATION?
Note: A "Yes" response will terminate ALL registrations with all SROs and all jurisdictions.
Discharged Other Permitted to Resign Deceased Voluntary
If the Reason for Termination entered above is Permitted to Resign, Discharged or Other, provide an explanation below:
If amending the Reason for Termination and/or termination explanation, provide an explanation below:
7F. Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of:
1. violating investment-related statutes, regulations, rules or industry standards of conduct?
2. fraud or the wrongful taking of property?
3. failure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?
The Panel recommended the expungement of Claimant's Form U5 based upon a finding that the current termination explanation was untrue and defamatory. Pointedly the Panel found that:
[C]laimant's performance was well within the parameters established by Respondent Park Avenue and that Claimant had not, in fact, retired.
As set forth in the FINRA Arbitration Decision, the Panel recommended that the "Reason for Termination" be revised to indicate "OTHER" and that the explanation should read:
There was no cause for termination.
Further, the Panel recommended that:
[T]he Termination Explanation be changed to read: "There was no cause for the termination." The Reason for Termination shall remain the same.
Bill Singer's Comment
According to online FINRA BrokerCheck files as of January 11, 2018, Hunnewell was first registered in 1989. There are no disclosures on her record. Under the heading, "Registration History," Hunnewell is disclosed as having been with Park Avenue Securities from December 2009 to December 2014.
FINRA Rule 2080: Obtaining Customer Dispute Expungement
FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute
FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080
READ the BrokeAndBroker.com Blog Expungement Archive