Invesco Arbitrates Termination of (Non-?) Employee

January 3, 2011

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in June 2010, Elizabeth Stana sought unspecified damages, costs, interest, and fees for defamation and wrongful termination. Also, Claimant Stana sought expungement of certain allegedly defamatory statements on her Uniform Termination Notice For Securities Industry Registration ("Form U5″). In the Matter of the Arbitration Between Elizabeth A. Stana, Claimant vs. Invesco Aim Distributors, Inc., Respondent (FINRA Arbitration 10-02680, December 20, 2010). 

Respondent Invesco Aim generally denied the allegations and asserted various affirmative defenses. 

On or about December 3, 2010, the parties filed a Joint Motion for Relief and Dismissal, that resolved the claims and dismissed the proceedings. However, the parties submitted to the FINRA Arbitration Panel the issue of the expungement of two Form U5s submitted by Respondent Invesco Aim. 

Who's on First? 

You might want to start taking notes here because this is going to get complicated . 

In no particular order or for any specific reason, let's start with a basic issue that the FINRA Arbitration Panel resolved: Claimant Stana was employed by Invesco Institutional (N.A.), Inc. ("Institutional"). 

Okay, so - look at the caption for this FINRA arbitration. Note that Invesco Institutional is nowhere to be found. It's not a Respondent.

Why wasn't Institutional named in the FINRA arbitration? A likely answer is that Institutional is not a FINRA member firm - and FINRA's arbitration forum has no jurisdiction over a non-member. Nonetheless, Claimant Stana was an employee of Institutional.

How the hell did this case wind up in a FINRA arbitration if Institutional is not a member firm? 

Great question!

Claimant Stana's employment with Institutional involved internal marketing support operations and did not involve the sale of securities or regular nor direct contact with the investment community. However, as an employee of Institutional, Claimant Stana provided services to Respondent Invesco Aim Distributers, Inc., which is a FINRA member firm.

Of course, as if this all wasn't complicated enough, Respondent Invesco Aim goes ahead and registers Claimant Stana with FINRA. 

Aha!  Now we can see (sort of) the apparent relationship that gets Claimant Stana's case before a FINRA arbitration panel. 

As a consequence of Institutional's decision to terminate Claimant Stana's employment, Claimant was no longer in a position to render services to Respondent Invesco Aim. As a result of Institutional's decision to terminate Stana and thus eliminate her ability to render services to FINRA member firm Respondent Invesco Aim, a Form U5 was required to be filed in order to terminate Claimant's registration with that member firm. 

She is but she isnt, and they aren't but the other one is, and they didn't but the other one did - even though they didn't have to and probably shouldn't have to begin with but they did anyway.

Wow, I dunno about you but I have quite a headache. Lemme go find a dark room to sit in.

The FINRA Panel Sorts it Out

The FINRA Arbitration Panel found that the end of Claimant Stana's registration came about as a consequence of the decision by her employer Institutional to end Claimant's employment with Institutional. Moreover, the Panel determined that Respondent Invesco Aim took no independent action to evaluate and end the employment relationship between Claimant Stana and non-member Institutional. 

So - for starters, the Arbitration Panel found that Claimant was terminated by Institutional and that Respondent Invesco Aim had nothing to do with that situation. Okay, that's a nice, basic finding. 

Accordingly, the Arbitration Panel found that as a FINRA non-member firm, Institutional had no obligation to make a report to FINRA in regard to Claimant's termination. 

In an effort to start bringing things to a conclusion, the Panel reasons that because Claimant Stana was not Respondent Invesco Aim's employee, Respondent Invesco Aim could not report the termination of any "employment" relationship between it and Claimant. 

Then there's the second part of the equation: Respondent had no obligation to report to FINRA in regard to the end of Claimant's employment relationship with non-member Institutional. 

Nonetheless, the FINRA Panel determined that Respondent Invesco Aim had an obligation to report the reasons why Claimant Stana's registration in association with Respondent ended.

Let's try to sum all that up: You didn't hire her, they did. You didn't fire her, they did. They're not a member firm, so they don't have to explain squat to FINRA. You filed that damn U4 about her so you have to file a U5 to terminate her registration, even if you didn't end her employment (which never existed with you to begin with). 

Yeah, I know, back to the darkened room and that throbbing headache.

Expungement 

Of course there still has to be one last, nasty twist to this case - right? Well, here it is: Somehow Claimant Stana, a non-employee of a FINRA member firm, winds up with two Form U5s.

The FINRA Panel recommended that the termination explanations on the two Form U5s of Respondent Stana should be expunged. Specifically, the Panel found that the termination explanation in Claimant's Form U5 dated 

  • October 6, 2009: "terminated for performance unrelated to the sale of securities"
  • January 5, 2010: "terminated employment due to non-alignment of skill set with job function unrelated to the sale of securities",

should be replaced with the following language on both of Claimant's Form U5s "loss of employment with non-member affiliate." 

The reason for termination, "other", will remain the same on both Forms U5s.

In any event, Claimant Stana must obtain confirmation from a court of competent jurisdiction before the Central Registration Depository (CRD) will execute the expungement. The Form U5s are not automatically amended by the FINRA arbitrators' ruling to include the changes indicated above. Also, Claimant must forward a copy of the arbitration Award to FINRA's Registration and Disclosure Department for the amendments to be incorporated into the Form U5s.

Bottom Line: Respondent Invesco Aim didn't terminate Claimant Stana's employment for any reason because she apparently wasn't that firm's employee to begin with and her relationship with Respondent ended because she was terminated by a non-member firm that had somehow, someway made her "available" to help out at Respondent's firm. That non-member firm terminated her for "non-alignment of skill set," which sort of sounds like a chiropractic problem, if you ask me, but, seriously, don't ask me because this is too complicated to begin with and I'm sitting in the corner of a dark room with a migraine.