April 25, 2018
You ever start reading a decision in a lawsuit and once you get past the introduction, you're pretty sure that you know how the matter will be decided? Today's two-for-one FINRA Arbitration was just such a case. To be candid, I had placed my money on Claimant Ameriprise and against its former employee. No . . . I'm not a saying that I agreed with the firm's claims. I'm simply saying that how the assertions and allegations set up in the FINRA Arbitration Decision suggested that the former employee was going to lose. Boy, was I wrong!
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2016, FINRA member firm Ameriprise Financial Services, Inc. ("AFSI") asserted breach of an August 4, 2014, promissory note and a May 29, 2014 Franchise Agreement; unjust enrichment; and conversion of loan funds in connection with Respondent Barker's alleged failure to repay AFSI upon his termination. Claimant AFSI sought $242,030.35 in Note principal plus about $14 a day in pre-award interest; $1,718.97 in Franchise Agreement balance plus pre-award interest; post-award interest on the Note and Franchise Agreement balances; attorneys' fees and costs. In the Matter of the FINRA Arbitration Between Ameriprise Financial Services, Inc., Claimant, vs. William G. Barker, Respondent (FINRA Arbitration 16-01831, April 23, 2018)
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2016, registered representative Claimant William G. Barker asserted unjust enrichment; intentional
interference with business relationship; defamation; and estoppel in connection with his AFSI employment. In addition to seeking an expungement of his Central Registration Depository record, ("CRD"), Barker sought at the close of the hearing $350,000 per year for ten years economic damages and $100,000 per year for ten years non-economic damages plus punitive damages. In the Matter of the FINRA Arbitration Between Ameriprise Financial Services, Inc , Claimant, vs. Ameriprise Financial Services, Inc., Respondent (FINRA Arbitration 16-01832, April 23, 2018)
Pursuant to the parties' stipulation, the FINRA Arbitration Panel consolidated the two arbitrations and deemed 16-01831 to be the "Master" and 16-01832 to be the "Subordinate" case.
FINRA Rule 8210 Documents
In March 2017, Barker filed an Emergency Motion to Compel, which is characterized in the FINRA Arbitration Decision as follows:
for the purpose of obtaining documents
related to FINRAs Rule 8210 request of AFSI. AFSI objected on the grounds that,
among other things, FINRA investigation documents are inadmissible and irrelevant,
which Barker refuted. The Panel heard oral argument from the parties at the outset of
the evidentiary hearing and granted the Motion.
The FINRA Arbitration Panel found Barker liable on the breach of the promissory note claim and ordered him to pay to AFSI $242,030.35 plus $10,817.51 interest plus attorneys' fees as to be determined by a court of competent jurisdiction.
The FINRA Arbitration Panel found AFSI liable on the claims of defamation, intentional interference with
business relationship, unjust enrichment and estoppel and ordered the firm to pay to Barker $550,000.
The Panel off-set the two awards above and issued a net award to Barker of $297,152.14
Having found defamation, the Panel recommended the expungement of the "Termination Comment" on Barker's Form U5 and recommended it be revised to:
Termination due to disagreement regarding corporate policies
The Panel left undisturbed the "Reason for Termination" but proposed conforming changes by recommending that the "YES" answer to Question 7F(1) be revised to a "No," and the accompanying Disclosure Reporting Page be deleted.
Bill Singer's Comment
SIDE BAR: Uniform Termination Notice for Securities Industry Registration ("Form U5")
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?
I hold myself to the same standards that I ask of FINRA when it publishes its regulatory and arbitration docket by noting that I have investigated Barker's online BrokerCheck record and although it contains numerous disclosures, I have exercised my discretion to not disclose various reported matters on BrokerCheck given the nature of the FINRA Arbitration Award. Pointedly, Barker provided a "Broker Comment" in response to AFSI's presently-posted employment-termination explanation. His comment includes reference to a very personal issue. Pursuant to the Panel's recommended expungement, the former employer's comment may be altered, which could prompt Barker to delete or revise his posted response. Should I publish commentary on his response and that is subsequently altered, my remarks will persist online whereas his may be removed. Given the nature of his explanation, I believe he is entitled to the exercise of my discretion in not perpetuating the underlying defamation. You are free to pursue your own online inquiries but I will exercise my discretion and not offer further background comment about Barker.
Also, I want to note my profound puzzlement as to how or why what seems to be documents produced to FINRA in response to the regulator's Rule 8210 demands were deemed admissible in the arbitration. Not saying the Panel got it wrong but given that mere investigative requests and submissions are not normally admissible, I am intrigued by the arbitrators' rationale in granting the Motion.
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