March 26, 2019
Often, I find myself admonishing a client that "if you drive over someone with your car and kill them, you can't undo the damage by backing up over the body." In a recent FINRA expungement arbitration, a terminated employee sued his former firm in an apparent effort to win the removal of some unflattering language on his industry record. After the arbitration decision was issued, the former employee likely wished he hadn't started the whole mess.
Case In Point
In a FINRA Arbitration Statement of Claim filed in August 2018, associated person Claimant Ferguson, representing himself pro se, asserted wrongful termination by Respondent Vanguard and sought the expungement of his Form U5 and his Central Registration Depository record ("CRD").
In the Matter of the Arbitration Between William Dean Ferguson, Claimant, v. Vanguard Marketing Corporation, Respondent (FINRA Arbitration Decision 18-03073)
As stated in the FINRA Arbitration Decision:
[S]pecifically, Claimant seeks expungement of the Reason for
Termination which states "Discharged" and the Termination Explanation which states "VIOLATION OF PROFESSIONAL CONDUCT POLICY - WORK AVOIDANCE" from
his Form U5. . .
Curiously, although the FINRA Arbitration Decision asserts that he was duly notified, Claimant Ferguson did not appear at the Initial Pre-hearing Conference or the evidentiary hearing. Wow. I mean, gee, go figure, an employee is terminated for alleged "work avoidance," and fails to show up for the pre-hearing conference or evidentiary hearing. Vanguard must have had a chuckle over that.
The sole FINRA Arbitrator denied Claimant Ferguson's request for an expungement. In pertinent part, the FINRA Arbitration Decision alleges that:
Claimant started his employment with Respondent on June 19, 2017, and was
terminated ten months later on April 19, 2018. During this period, he was repeatedly
written up for violations of Respondent's Professional Conduct Policy. The details are
stated in Respondent's Exhibits, and were corroborated by Mr. F's testimony and by
Claimant's own Statement of Claim.
The Arbitrator finds that Mr. F's testimony and Respondent's Exhibits clearly establish
that Claimant repeatedly violated Respondent's Professional Conduct Policy.
Examples of Claimant's violations include the following:
"Hitting the "Get Work" key and subsequently releasing the request and repeating this until the desired type of work was received. This occurred
32 times in December 2017,43 times in January 2018 and 22 times in
February, 2018 (Exh. 1)";
"Manipulative conduct-multiple instances of personal breaks being used
while remaining in "Get Work" status (Exh. 1)";
"Watching You Tube [sic] playing on his cell phone when he should have
been working-3112118 (Exh. 2)";
"Watching a hockey game in Aux 3, a code to be used for training
purposes-3/22/2018 (Exh. 2)";
"Pattern of arriving at work late-see, for example, 3/28/18 entry (Exh. 2)."
Claimant had repeated meetings with his supervisors during which he was counseled
regarding his violations of Respondent's Professional Conduct Policy. He was then
terminated on April 19, 2018.
In summary, Claimant's work record is replete with violations of Respondent's
Professional Conduct Policy. Therefore, the Arbitrator finds that the language recorded
in Claimant's Form U5 accurately reflects his conduct, is not defamatory and should not
Bill Singer's Comment
Compliments to this sole FINRA Arbitrator for producing a Decision replete with content and context plus a compelling rationale!
I often warn clients seeking an expungement to be careful -- very careful -- about moving forward. In matters involving disputes over whether a termination was wrongful, I counsel such clients about how they presently retain some control over the narrative of events. Said "control" is not a license to lie on an employment application or Form U4, and it's not an invitation to fabricate facts and engage in defamation during a job interview; however, notwithstanding such legitimate constraints, most terminated employees retain the right to their perspective of events and their interpretation of what prompted their termination.
Filing a FINRA expungement case may well have ramifications on a former employee's ability to honestly tell her tale. For starters, you will have to prepare a written statement of facts, which may well be asked for by a future employer or could be provided by your former employer or others involved in the arbitration. Once it's in writing and out there, you just never know how it may come back to help or haunt you. Additionally, whatever difficulties former employees may experience during job interviews when the circumstance of their having been "fired" by a former employer comes up, the negativity attendant to such a fact is often exacerbated if a potential employer learns that you have also initiated a lawsuit against a prior employer. So . . . make sure to think things through before you pull the trigger on hiring a lawyer and filing your claims.
Why do I play the Devil's Advocate when a terminated employee comes a knockin' at my law firm door? The simple answer is that as long as you haven't sued anyone, you retain some flexibility to present your version of events; on the other hand, once you sue and your claims have been adjudicated, well, now things may be much worse. Once a formal FINRA Arbitration Decision is written and posted on the organization's website, you may well lose the ability to depict your grievances as a he-said-she-said disagreement between a former employer and a former employee. The Decision may quash any vestiges of an open question and replace that uncertainty with the findings of one or more independent adjudicators. If the Decision goes in your favor, that's great and you could provide copies of your victory to the interviewer at all your job interviews. If the Decision goes against you, well now it's carved in stone by a third-party(s) and you may now have to explain the arbitrator(s) findings. If the Decision concludes that your former employer was justified and that your testimony amounts to nothing more than a warm, steamy pile of crap, well, hey, you look like a sharp stockbroker, you can pretty much figure out how it's going to play out. Have you thought about a new career driving for Uber or Lyft?
Using the example of Claimant Ferguson, he sued to get the expungement of what he viewed as Vanguard's wrongful termination. The key word there was "wrongful." If Ferguson had gone out on job interviews, he may well have been spun his story as depicting his former employer as a hell hole where he was worked to death. After such an interview, a potential Wall Street employer is supposed to contact a prior employer and get the details of your employment history. Vanguard may have simply confirmed the dates of Ferguson's employment and said that he wasn't a good fit -- or something else along those innocuous lines. Vanguard may have made it a point of casting Ferguson in a nasty, unflattering light and gone into detail about his dubious avoidance of work. As with many things in life and business, we don't know what we don't know, and it's anyone's guess as to whether some potential employer spoke with anyone at Vanguard and Ferguson reacted with his arbitration in response.
Ultimately, Ferguson did himself no good by suing his former employer. He certainly didn't do himself any good by suing and then not showing up for the hearing sessions. He certainly didn't do himself any good by inviting the nasty disclosures about his workplace behavior that are now posted on FINRA's arbitration database -- which has a half-life of Bismuth-209. He certainly didn't do himself any good by losing his ability to control the narrative of Vanguard's termination and now having to answer questions about an independent FINRA Arbitrator's findings that Ferguson's "Form U5 accurately reflects his conduct, is not defamatory and should not be expunged."
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