At first blush, this looked interesting. Another intra-industry dispute over what is typically called an EFL case - Employee Forgivable Loan -- but with a twist: The broker initiated the Financial Industry Regulatory Authority (FINRA) Arbitration proceedings as the Claimant and he sued his former firm for $1,500,000.00. See . . . I told you that this looked interesting. However, after reading the entire Panel Decision, I'm no longer blushing. Frankly, about the only reaction that I can summon up is: "What the hell was that all about?"
The short case summary provided by the FINRA Arbitration Panel simply says that Associated Person Gilbert Millstein filed a Statement of Claim against FINRA member firm Oppenheimer & Co., Inc. alleging Breach of Contract, Misrepresentation, and Promissory Estoppel. In the Matter of the Arbitration Between Gilbert Millstein (Claimant) vs. Oppenheimer & Co., Inc. (Respondent) (FINRA Arbitration 08-03749, March 5, 2010). Millstein seeks about $1,500,000 in damages - a very tidy sum. In addition to denying his charges, Oppenheimer counterclaimed for $464,066.11 in damages arising from Millstein's alleged failure to pay amounts due under the terms of two promissory notes, which Millstein also denied.
Bill, Bill, Bill - you plead with me -- more details, more details. You shake your head in bewildered confusion. You ask, What is this case about? I reply that all I know about the arbitration is what I wrote above. That's it?, you ask. That's it, I reply. But, but, but - you stutter, sounding like an old tugboat - these folks are asking for some relatively hefty seven- and six-figure damages. Surely, FINRA provides more detail, you insist.
My name is Bill, don't call me Shirley, and, "no" FINRA arbitration decisions are typically sparse.
If you don't believe me, consider what passes for the rationale as to why the Panel made its award:
After considering the pleadings, the testimony and evidence presented at the hearing, the Panel has decided in full and final resolution of the issues submitted for determination as follows:
1. Respondent is liable for and shall pay to Claimant compensatory damages in the amount of $575,000.00.
2. Claimant is liable for and shall pay to Respondent compensatory damages in the amount of $464,066.00.
3. Any and all relief not specifically addressed herein is denied.
The High-Priced, Big-Shot, Industry Lawyer's Detailed Case Analysis
So, lemme see here. Claimant Millstein wanted $1,500,000 for something. He got about one-third of that. Okay, not sure what he was owed or why or what Oppenheimer did or didn't do but, hey, if someone awards you $575,000, like, what??? you're not going to pocket it.
Of course, there's the set-off issue involving Oppenheimer's demand for big bucks for two unpaid promissory notes. Why didn't Millstein pay them? Dunno. However, the facts were apparently sufficient for the Arbitration Panel because Oppenheimer got every penny that demanded.
All in all, a net of about $110,000 for Millsetin ain't a bad day's work except if there are reasons that Millstein should have gotten far more dollars or far less. Sadly, we'll never know.
The High-Priced, Big-Shot, Industry Lawyer's Sarcastic Yet Stunning Conclusion
What is ultimately so wrong about FINRA's version of the short-and-sweet? Maybe the best way that I can explain it is to compare it to a restaurant menu that offers only the following:
Main Course Meat: $24
Main Course Fish: $28
Main Course Poultry: $20
Side Dish: $8
Hot Beverage: $2
The waiter comes to take your order. You ask him, "What is the Appetizer?"
He points to the menu and says, "Eight dollars."
"Yes, I see the price," you say, "but what is today's appetizer?"
"Eight dollars," the waiter repeats.
"Okay, let me try this another way, what is the soup?"
"Yes, but what is the soup made of?"
"Tonight we are offering a hot liquid -- and it's six dollars."
With some increasing frustration, you ask about the main course meat dish, "And what is the meat, and how is it prepared?"
"It's meat that we cook in the kitchen, serve it to you on a plate at the table, and it's attractively priced at $24," comes the waiter's expected reply.
Hungry and tired of the banter, you order the $8 Appetizer, the $24 Main Course Meat, and the $8 Side Dish.
When your order arrives at your table, you poke around the plates and can't quite figure out what the hell is on them. When you eat your meal, you can't quite figure out what you're eating. Upon clearing the table, your ever-helpful waiter cheerfully chimes in, "Would you like our $8 Dessert and $2 Hot Beverage?"
This is no way to run a restaurant and no way to run mandatory arbitration.