by Bill Singer
U5 Says "Discharged" But FINRA Arbitrators Say "Voluntarily Resigned"
August 23, 2011
If you are a regular reader of BrokeAndBroker, you know my oft-repeated lamentation about how too many Financial Industry Regulatory Authority ("FINRA") Arbitration Decisions lack adequate explanations of the underlying facts or the rationale for the ruling. As such, many of my columns about FINRA arbitrations contain sentences that begin with: As best that I can tell . . .
Of course, with that lead-in, it's pretty obvious how this column is going to begin.
Calrow Fired
As best that I can tell, Dorothy Calrow was fired on or about September 7, 2010, by her then employer 1st Global Capital Corp. In filing Calrow's Form U5, 1st Global represented that she had been "Discharged" and explained the circumstances as follows:
DURING A REVIEW OF THE REPRESENTATIVE'S WEBSITE, THE FIRM FOUND THAT THE REPRESENTATIVE FAILED TO NOTIFY THE FIRM ABOUT THE OPENING OF A NEW OFFICE LOCATION AND FAILED TO FILE ADVERTISING WITH THE FIRM'S COMPLIANCE DEPARTMENT FOR REVIEW AND APPROVAL. IN ADDITION, THE FIRM FOUND THAT THE REPRESENTATIVE HELD OUT AN INDIVIDUAL TO THE PUBLIC AS A REGISTERED REPRESENTATIVE OF 1ST GLOBAL WHO IN FACT WAS NOT REGISTERED AS SUCH.
Calrow Sues
In January 2010, Calrow (proceeding pro se) filed a FINRA Arbitration Statement of Claim against 1st Global seeking an expungement of her U5 and perhaps asking for $6,234 in damages - I say "perhaps" because although that number is set forth in the "Claim Data" portion of the FINRA Arbitration Decision, there is a separate comment stating that:
At the expungement hearing held on July 11, 2011, Claimant clarified that she is alleging actual compensatory damages in the amount of $16,324.00. Furthermore, at the expungement hearing held on July 11, 2011, Claimant notified the Arbitrator that her claim for compensatory damages in the amount of $16,324.00 plus unspecified legal fees is withdrawn and dismissed with prejudice.
In the Matter of the FINRA Arbitration Between Dorothy Calrow, Claimant, vs. 1ST Global Capital Corp., Respondent (FINRA Arbitration 11-00160, August 16, 2011).
Typically, at this point in the blog, I would tell you that Respondent 1st Global generally denied the allegations and asserted various affirmative defenses, but since the FINRA Decision doesn't state that, I can't confirm that.
Why? Dunno.
The sole FINRA Arbitrator recommended expungement of Claimant Calrow's Form U5 and Central Registration Depository records based upon a finding of defamation. The Arbitrator recommended that the Reason for Termination be revised from Discharged to Voluntary. That's a fairly dramatic change because it's suggesting that Claimant Calrow was not fired but voluntarily resigned.
On what basis did the Arbitrator reach that conclusion? Sorry, dunno, we're not really told.
Separately, it appears that the FINRA Arbitrator recommended that the quoted commentary above be struck and that no replacement language whatsoever be provided. I'm guessing that the Arbitrator decided that since there was no discharge and that the employment relationship apparently ended with Claimant's quitting, that this blank commentary was appropriate. If that's the case, I agree. However, I wish that the Decision better set forth how we got from Point A to Point B.
Ultimately, Claimant Calrow represented herself quite well. She won a substantial victory in getting what she viewed as defamatory language eliminated from her Form U5. Also, Calrow achieved a major revision of the circumstances of her termination by winning the right to amend a previously filed discharged to the common, innocuous voluntary.