May 25, 2019
In a recent FINRA public customer arbitration against Merrill Lynch, the FINRA Arbitration Panel dismissed the claims as being filed too late. Spoiler Alert: The odds are 2:1 that you won't guess the twist in this story until you come upon it.
Regulatory staff often overplay their hands. They so often win by bluffing that they habitually overrate their cases. A competent trial lawyer can often see when adversaries don't have the winning hands they've deluded themselves into thinking they do. In FINRA v. Morton, a defense lawyer smartly called FINRA's bluff, forced them to trial, and watched them get their heads handed to them twice. A regulator's "I don't believe you" should never be enough to drag someone through an enforcement action like the client was.
In a recent FINRA intra-industry arbitration, we come across a former Scottrade Senior Manager of Brokerage Operations, who alleged that following his role in a workplace altercation, he was terminated in a manner that discriminated against him on the basis of age and race. The parties settled the matter and the associated person pursued an expungement of his industry record. Exactly what happened is not substantively disclosed in the FINRA Arbitration Decision. The terms of the settlement are not revealed. What the arbitrators deemed defamatory is not spelled out. To quote Bob Dylan's "Ballad of A Thin Man" And you know something's happening but you don't know what it is, do you, Mr. Jones?
The SEC goes after an alleged Ponzi scheme involving a purported cryptocurrency business that was backed by fancy colored diamonds. Diamonds may be a girl's best friend but they sure as hell aren't an investor's. Yet another warning as to why investors must do due diligence. Yet another reason to remember that what seems too good to be true usually is.
In today's featured FINRA intra-industry arbitration, we are asked to consider the circumstance of a settlement agreement and its impact upon an associated person's request for expungement of a customer complaint. The associated person Claimant asked his former firm to produce the settlement agreement. The firm objected on the basis of legal privilege. The sole FINRA Arbitrator slams Claimant and his counsel for not producing the settlement agreement. What's not clear is why the Arbitrator goes off on Claimant and his counsel. What's even more perplexing is why there's nary a word of criticism directed against the FINRA member firm.