August 18, 2018
The BrokeAndBroker.com Blog's publisher, Bill Singer, has long advocated for the creation of an Anti-Fraud Fund on Wall Street to serve as a back-stop for defrauded public investors who obtain awards of compensatory damages against insolvent industry firms and registered representatives. Bill does not favor extending such a guaranty into punitive damages or "unreasonable" attorneys' fee and other charges, but he does believe that the securities industry has the wherewithal and the moral/ethical obligation to put its money where its dirty mouth has been. While there may be legitimate debate as to how best to fund the anti-fraud fund, that only goes to the mechanics of doing the right thing. In the case of the Financial Industry Regulatory Authority, we have a self-regulatory-organization that needs to get behind this pro-consumer effort and with haste. Over the years, the BrokeAndBroker.com Blog has presented cases that question the fairness of FINRA's mandatory arbitration forum. Similarly, Bill Singer often criticizes FINRA for the regulator's inept and incompetent oversight of miscreants and recidivists. In today's featured FINRA public customer arbitration, we see the troubling history of two victims dealing with the FINRA community, and we are forced to ask whether their apparent arbitration "victory" is anything more than a sham. FINRA's regulatory mandate is set out in FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade: "A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade." Today's BrokeAndBroker.com Blog asks whether the self-regulatory-organization itself will observe high standards of commercial honor and just and equitable principles of trade when it comes to seeing that justice is done for defrauded public investors.
News that Apple broke the $1 trillion market cap made me remember 1977. Mostly, I remember being twenty-something. But also, Star Wars (the original) was the year's blockbuster. Woody Allen's Annie Hall didn't quite show the Manhattan where I lived, in the pre-grunge grunginess of the West (Greenwich) Village. Saturday Night Fever jump-started the disco era. (In April, Donald married Ivana, but that spins a different tale.) And Scientific American devoted its entire September issue to the future of the computer.
FINRA should immediately appoint an outside, independent counsel to investigate the allegations raised by arbitration Chair Brooks White, particularly as they pertain to possible staff misconduct and/or fraud perpetrated upon the arbitration panel. If, when, and as appropriate, FINRA should suspend or place on administrative leave any staff whose conduct presents the reasonable appearance of malfeasance, nonfeasance, or other misconduct. If the Board determines that, in fact, misconduct occurred, a recommendation of suspension and/or termination of employment should be forthcoming. The Board should unequivocally confirm that no retaliatory action of any nature should be taken against Ardian Hasko or Brooks White, and, in particular, the Board should regularly review over the course of at least the next three years, FINRA's list of arbitrators and the appointments of same to ensure that its dictates are being followed with respect to the further service of arbitrator White. Finally, the independent counsel should be tasked with preparing a report to be provided to the Board but also publicly published on FINRA's website.
Breathtaking. Stunning. Stupendous. Majestic. Brilliant. Such are the first thoughts that came to mind for BrokeAndBroker.com Blog's publisher Bill Singer after he first read today's featured FINRA intra-industry arbitration. At issue was a somewhat run-of-the-mill employment dispute in which an associated person sought six-figures in damages from his former employer Morgan Stanley Smith Barney. You wouldn't think any of that would set the stage for an amazing FINRA Arbitration Decision. Well, life is full of surprises. Be prepared to be amazed! The Chair of the FINRA arbitration panel asserted that he was being victimized by an "ethically corrupt attempt to have me sign based on false pretense." Further, the Chair requested this extraordinary sanction:
In recognition of the Claimant's pro se status, it is my additional request that FINRA be charged with all attorneys' fees and expenses, court costs and other related expenses for both parties, or either party, as the case may be, and of those of any other persons, if any, compelled by the court to appear or give testimony, for FINRA's actions in connection with this dispute as set forth above. As the court deems appropriate it should also charge FINRA with a penalty for any action it deems ethically improper or otherwise egregious in conduct.
Don't go to the gym before you read today's BrokeAndBroker.com Blog. In fact, sit down, put your feet up, and brew a pot of coffee. Today's article features what is now a 14-year long affair that started with a 2004 employee forgivable loan and became a 2008 filing of a FINRA Arbitration Statement of Claim by a former UBS associated person against that broker-dealer. It entails an arbitration and two rounds in the Ohio state courts. We may be done. We may not be done. It all depends upon whether someone decides to file yet another appeal. What is clear, at least as of today, is that the former employee sued UBS for nearly $3 million in compensatory and punitive damages plus interest, fees, and costs. As of this month, the employee owes UBS a lot of money. And that's not the worst of it.