wrongfully terminated Claimant and defamed her by knowingly making false statements in the Form U5 filed by Respondent as part of her registration records maintained by the Central Registration Depository ("CRD").
SIDE BAR: FINRA Code of Arbitration Procedure for Customer Disputes:FINRA Rule 12212: Sanctions(a) The panel may sanction a party for failure to comply with any provision in the Code, or any order of the panel or single arbitrator authorized to act on behalf of the panel.Unless prohibited by applicable law, sanctions may include, but are not limited to:
- Assessing monetary penalties payable to one or more parties;
- Precluding a party from presenting evidence;
- Making an adverse inference against a party;
- Assessing postponement and/or forum fees; and
- Assessing attorneys' fees, costs and expenses.(b) The panel may initiate a disciplinary referral at the conclusion of an arbitration.(c) The panel may dismiss a claim, defense or arbitration with prejudice as a sanction for material and intentional failure to comply with an order of the panel if prior warnings or sanctions have proven ineffective.
Diana Marie Petersen was given a five day notice of termination of the Financial Advisor contract with her supervisor and Raymond James Financial Services, Inc. on October 27, 2015, effective November 1, 2015. No reason for termination was provided at that time and the termination was not for cause. Diana Marie Petersen had engaged in a number of minor violations of Raymond James Financial Services, Inc. policy and was in conflict with her supervisor. None of this behavior was determined by Raymond James Financial Services, Inc. to justify termination for cause. After serving the notice of termination, not for cause, it was discovered that Diana Marie Petersen had signed her husband's name out of convenience to a letter the husband had authorized in connection with the husband's duties as a Trustee. The letter did not involve an investment, but because the trust was a client of Raymond James Financial Services, Inc., signing her husband's name was an additional violation of Respondent policies. Subsequently, Raymond James Financial Services, Inc. terminated Diana Marie Petersen's registration with Raymond James Financial Services, Inc. under the for cause clause on November 10, 2015.The Reason for Termination shall remain the same.The Panel recommends the expungement based on the defamatory nature of the information. The language in Claimant's Form U5 filed suggests conduct that portrays Claimant in an extremely negative light making it quite difficult if not impossible for her to obtain new employment in the financial services industry. These words were chosen by Respondent's law department to protect the supervisor and Respondent and do not accurately reflect the reasons why Claimant was terminated. The Panel is not making a finding that all the elements of common law defamation have been established, but the words are generally defamatory, damaging to Claimant's reputation, and could mislead the public. The incidents do not involve customer dispute information.
Prior to the hearing and renewed at the hearing, Claimant moved for sanctions against Respondent for violating multiple Panel Orders to produce documents. The Panel decided to award monetary sanctions to Claimant in the amount of $100,000.00.
According to the FINRA Office of Dispute Resolution Arbitrator's Guide, "Failure to comply with the discovery rules hinders the efficient and cost-effective resolution of disputes and undermines the integrity and fairness of FINRA's forum." The litany of excuses that Respondent did not know that Claimant was requesting, and the Panel was repeatedly ordering, production of all documents responsive to the discovery requests, that Respondent disagreed with the Panel's multiple orders to produce, that Respondent spent a lot of money in the discovery process, or that Claimant was also guilty of discovery abuse does not come close to justifying Respondent's repeated refusal to comply with the rules in the Code of Arbitration Procedure (the "Code") and the Panel's orders. Respondent did finally produce numerous additional documents a few days before the final hearing. However, these documents should have been produced months prior to the final hearing to allow Claimant an opportunity to plan and present its case and to allow this Panel to hear the case in an orderly manner.The Panel's Order dated May 22, 2019 (drafted by the previous Chairperson, on behalf of the unanimous Panel), reaffirmed previous orders and required production of the relevant discovery documents by June 15, 2019 at 5:00 P.M. The Order provided that "failure, for any reason, to comply with the deadline of June 15, 2019 may result in the panel's negative or adverse inference(s) and will trigger sanctions in the amount of ten thousand dollar [sic] ($10,000) per day". Respondent, again, chose not to comply. See the Panel's Order of July 21, 2019 (drafted by the current Chairperson, on behalf of the unanimous Panel). The Panel is tempted to impose the nearly half-million dollar sanction Respondent has earned because of its deliberate disregard of Panel Orders. In light of the scope of this case, however, we believe some mitigation of that sanction is appropriate and will still serve the purpose of upholding the integrity of the FINRA arbitration process and send the appropriate message to Respondent.
[T]he Panel is tempted to impose the nearly half-million dollar sanction Respondent has earned because of its deliberate disregard of Panel Orders. In light of the scope of this case, however, we believe some mitigation of that sanction is appropriate and will still serve the purpose of upholding the integrity of the FINRA arbitration process and send the appropriate message to Respondent.
FINRA Rule 12212: Sanctions. . .(b) The panel may initiate a disciplinary referral at the conclusion of an arbitration.