In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in September 2009, Claimant Merrill Lynch asserted breach of promissory note and unjust enrichment causes of action arising from Respondent Aquino's alleged failure to pay the balance due and owing on a Promissory Note executed on or about April 22,2008 (the "Promissory Note"). Claimant sought
- $969,870.41 in compensatory damages for the outstanding principal of the Note;
- interest from September 21, 2009 through such date as the principal and Interest are fully paid, accumulating at a rate of $132.86 per day;
- attorneys' fees;
- costs; and,
- any additional relief the Panel deemed just and appropriate.
By the close of the arbitration hearing, Claimant had further clarified various damages as $80,911.74 in interest through July 16, 2010 ; $419,501.26 in attorneys' fees , and, $32,605.83 in costs. In the Matter of the FINRA Arbitration Between Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Claimant, vs. Angel E. Aquino, Respondent (FINRA Arbitration 09-05587, June 14, 2011. Hearing Site: San Juan, Puerto Rico)
Respondent generally denied the allegations, asserted various affirmative defenses. Respondent filed a Counterclaim asserting breach of contract and termination without cause, and he requested:
- $1,000,000 for the loss of Monthly Transition Compensation;
- $200,000 for the loss of Revenue Performance Bonus damages
- $200,000 for the loss of Up Front Contingent Award
- $100,000 per month for the loss of commissions
- $2,000,000 for the loss of negotiating an advance against future commissions with another firm
- $50,000,000 in damages for the present value of commissions that would have been generated over Respondent's lifetime
- $4,000,000 for physical and mental pain
- $100,000,000 in punitive damages
- $50,000,000 in good will damages in the amount of $50,000,000;
- $7,500,000.00 representing five times his average yearly earnings
- five percent of the value of securities sold by Respondent during his tenure at Merrill Lynch;
- expungement of his Form U-5;
- attorneys' fees;
- any other relief the Panel deemed just and appropriate
At the close of the hearing, Respondent requested compensatory damages in the sum of $13,290,232.26.
SIDE BAR: I don't know about you but I love the sound of a $13 million claim. It just has a lovely ring to it. Also, this is setting up as one of those cases where you get a bucket of popcorn (don't tell my wife that I drenched it in butter), lay down on the couch, and prepare to watch a Heavyweight World Championship fight. I mean, c'mon, this is going to be a slugfest. And don't forget that Merrill Lynch started this with its $1 million-plus claim.
Now You See It
This case involved a number of Motions, among which was Respondent's Motion for Visual Inspection,which,among other things, requested that the FINRA Arbitration Panel order that a visual inspection of Respondent's former office be performed by the Panel to determine the visual and "audial" [stet] perception of witnesses to an event at issue, involving Respondent and his superior. The Arbitration Panel granted the Motion and conducted the requested inspection with legal counsel for both parties present.
SIDE BAR: Frankly, kudos to Respondent's legal counsel. A very clever move and something that more lawyers should demand. I have no knowledge of what the issue was here (not explained in the FINRA Decision) or what was in dispute in terms of the proximity of various parties, but from my years of practice I know that sometimes there's just not substitution for being there, standing there, and looking around. Sometimes a witness swears that he saw everything from his office or she heard it all from her desk but all the diagrams in the world just don't demonstrate how unlikely those claims are. However, get a jury or panel to stand in the office and see that the executive's desk was around the corner and behind a pillar or that the overheard conversation took place within a highly-walled cubicle amidst the hub-bub of a noisy trading floor and that physical proof can be compelling.
Respondent filed a Motion for Protective Order against Claimant (related to Respondent's wife) in which he asserted, among other things, that his wife received an unwarranted call from Claimant's representatives; and that Claimant's breach of Respondents and his wife's private life and sanctuary was unjustifiable.
Claimant asserted, among other things, that no attorney or employee of Claimant's counsel's firm made the alleged call; and, Respondent's wife had been identified as a potential witness on Claimant's witness list since June 23, 2010, to which Respondent had never objected. Respondent countered that his wife had never been identified as a witness on the witness list filed by Claimant.
Thereafter, Claimant admitted that it had inadvertently misstated that Respondent's wife was listed as a potential witness on its witness list. The Panel granted the Motion.
SIDE BAR: Ouch!
The FINRA Arbitration Panel found Respondent Aquino not liable and denied Claimant Merrill Lynch's claims with prejudice.
However, the Arbitration Panel was not done. Not by a long shot.
The Panel found Claimant Merrill Lynch liable for the defamatory nature of information placed on Respondent Aquino's CRD record and ordered the firm to pay to Respondent compensatory damages in the amount of $1,546,247.00 (prejudgment interest specifically excluded); and $600.00 representing reimbursement of the non-refundable portion of the Counterclaim filing fee previously paid by Respondent to FINRA Dispute Resolution. The Panel denied punitive damages and any award for emotional distress.
Based upon a finding of defamation, the FINRA Arbitration Panel recommended the expungement of the Termination Comment in Section 3 of Respondent's Form U5. The Panel recommends the expungement of the following language:
Mr. Aquino's employment was tenninated on September 21. 2009 for failure to adhere to the firm's policies and standards regarding employee conduct This matter did not involve customer accounts
The Panel recommended the following replacement explanation:
Mr. Aquino was terminated not for cause.
The Panel retained as unchanged "Discharged" as the Reason for Termination.