June 6, 2020
It is said that the only certainties in life are death and taxes. In today's featured FINRA expungement arbitration, we get to deal with both of life's certainties. We have a deceased customer. We have a dispute over taxes. All of which makes for less-than cheerful reading in these times of plague.
Guest blogger Aegis Frumento finds the unfolding events of 2020 eerily reminiscent of 1967, when LBJ convened the Kerner Commission to study the causes of racial unrest. The Kerner Commission Report didn't tell anyone anything that they didn't know then about the causes of racial protests and unrest (and it won't tell you anything that you don't already know today). Still, Frumento thinks it's worth reading, if only so you can avoid reading whatever silly report is commissioned to explain this year's protests and riots, because nothing's changed.
Wall Street is about nothing if not money. In today's featured dispute, we got a transitional bonus. We got production bonuses. We got promissory notes. We got a FINRA arbitration about Wells Fargo's efforts to collect $1.6 million in balances due. We got a federal court trying to figure out what was a bonus, what was a loan, and whether the arbitrators got the facts right.
As our nation grapples with racism, an African American investment advisor's charges of retaliation made their way through the federal courts. It started with his complaints to the EEOC that TIAA had racially discriminated against him. Then TIAA filed a Form U5, which the former employee believed contained an inaccurate narrative. After EEOC mediation, it appeared that the parties had reached a settlement whereby an Amended U5 would better explain the circumstances of termination. In fact, the revised language was received as little more than a breach of the parties' settlement and viewed by the former employee as a weaponized U5 employed in retaliation.
FINRA arbitrators have the power to refer to FINRA for investigation any matter or conduct that has come to an arbitrator's attention during and in connection with the arbitration. Unfortunately, arbitrators rarely undertake regulatory referrals; and, FINRA displays no interest in investigating or sanctioning its member firms' defamatory / materially false statements filed on Form U5 or with the Central Registration Depository ("CRD"). In contrast, FINRA fines, suspends, and bars associated persons when they file false disclosures on their Forms U5 or via CRD, or on their firm's annual compliance questionnaires. Yet another example of FINRA's disparate treatment of its member firms and their disenfranchised associated persons.