August 10, 2019
http://www.brokeandbroker.com/4740/Morgan Stanley TRO/
Getting a temporary restraining order ain't all that big a deal. Courts tend to hand them out with regularity. Getting the TRO transformed into a preliminary or permanent injunction, however, is a more arduous undertaking and for good reason. In a recent non-solicitation dispute, Morgan Stanley secured a TRO against former representative David James Sayler; however, when the brokerage firm tried to persuade a federal court to issue a preliminary injunction, the bench was not so disposed. The Court's Opinion is a primer on what may determine whether Wall Street's employer are granted or denied injunctions against their former employees.
FINRA member firm Barclays Capital Inc. ("BCI") offered Matthew Grady a job as an investment representative, and sweetened the deal with a $900,000 employee forgivable loan ("EFL"). The EFL was made by BCI's banking affiliate Barclays Bank PLC. The terms of the loan stated that it was extended by the bank independent of Grady's employment with the brokerage firm. And as if things weren't odd enough, the loan was made subject to the express understanding that any disputes arising out of the loan would not be subject to FINRA arbitration. That being said, when a dispute arose over repayment of a portion of Grady's EFL, BCI filed a FINRA Arbitration Statement of Claim against Grady. How did the lawsuit over the EFL wind up as a FINRA arbitration when the loan terms expressly prohibited such recourse? One answer may be that Grady represented himself. A more likely answer is that FINRA-the-regulator and FINRA-the-arbitration-forum sat on its fat ass on the sidelines. And so it goes. Day after day on Wall Street.
Charles Schwab & Co., Inc. apparently employs "Chat Representatives." That's nice. I like to chat. Frankly, most lawyers like me who charge hundreds of dollars an hour love to chat provided we're on the clock. In any event, after some 37 years on Wall Street, I don't actually know what a Chat Representative is or does. I looked up all the official categories of representatives on FINRA's website and, go figure, there's nothing about a Chat Representative and there isn't even an examination that you can take to become one. In any event, apparently a Schwab customer had a not-so-lovely chat with one of the brokerage firm's Chat Representatives because the customer sued claiming that the chatting rep had failed to place a sell order.
Any seasoned litigator will tell you that sometimes a client wins by losing and loses by winning. It's all very nuanced. You can be found guilty but ordered to pay a fraction of what was demanded in the last settlement offer. You can win but the legal fees bankrupt you. When it comes to the walking-wounded emerging from litigation, it's often tough to discern who won and who lost. It seems like everyone is limping. A recent FINRA intra-industry arbitration presents an example of how a party won her claim but still looks banged-up for the effort.