Pro Se Customer Slapped In FINRA Arbitration

March 6, 2014

As with many lawsuits involving pro se parties, things don't always go smoothly. Folks represent themselves for many reasons. Often it's because they simply cannot afford a lawyer. Other times, the pro se party despises lawyers and figures that she or he can do a better job. Whatever the reason, the participation of a self-represented party often challenges the trier of fact, adversaries, and witnesses.  The FINRA arbitration discussed in today's BrokeAndBroker Blog seems to confirm that axiom

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in November 2012 and as thereafter amended, public customer Claimant Poling, representing himself pro se, asserted breaches of contract and fiduciary, negligence, and fraud in connection with his investments in KBS Legacy Partners Apartment REIT, Inc., Griffin Capital Net Lease REIT, Inc. and Steadfast Income REIT, Inc. Ultimately, Claimant Poling sought rescission of the REIT purchases; $50,000 in compensatory damages; return of $90,000; and a refund of commissions. In the Matter of the FINRA Arbitration Between Stanley Bruce Poling, Claimant, vs. Centaurus Financial, Inc., Gregory Scott Kinkead, and Kinkead Wealth Management, Respondents (FINRA Arbitration 12-04001, February 27, 2014).

Respondent Cenaturus, Kinkead Wealth Management, and Kinkead generally denied the allegations, asserted various affirmative defenses, and sought an expungement of the matter from Respondent Kinkead's Central Registration Depository records ("CRD").

For Starters

In keeping with how FINRA arbitrations tend to roll-out, an initial Pre-Hearing Conference Scheduling Order instructed the parties to exchange all applicable documents outlined in the FINRA Discovery Guide by July 31, 2013. For unexplained reasons, Claimant Poling apparently opted not to comply with this Order.

We Can't Work It Out

On August 19, 2013, following the parties' failure to agree on terms for a Confidentiality Order and Motion for Protective Order, Claimant Poling requested a pre-hearing conference ("PHC") with the sole FINRA arbitrator.  In response, an August 29, 2013, Order requested that the Claimant and Respondents confer and agree on terms for the proposed confidentiality and protective order.  

On September 4, 2013, the Respondents submitted a response in opposition to Claimant's August 19th request; and, thereafter, on September 17, 2013, the Respondents submitted a Motion to Compel and for Sanctions, to which Claimant Poling did not respond. 

Can I Take Your Order(s)?

I am not going to engage in conjecture as to why Claimant Poling purportedly failed to comply with the initial Discovery order and, thereafter, failed to respond to Respondents' motion to compel his cooperation in Discovery and to sanction him for his prior non-cooperation.  There are often many reasons given for trench warfare during Discovery. Suffice it to say, arbitrators rarely enjoy such hostilities and if a party's conduct is viewed as unwarranted posturing, that negative impression could well impact the outcome of the case and the amount of damages awarded.

On September 17, 2013, an Order was issued requiring Claimant Poling to submit records within ten days. 

For whatever his reasons, Claimant Poling was not disposed to comply with the September 17th Order' and, thereafter, the FINRA Arbitrator issued an Order dated October 16, 2013, for $300 in sanctions against Claimant payable to Respondents.

On October 22, 2013, Claimant Poling submitted a Request that the Arbitrator Reconsider Sanctions, which Respondents opposed. On November 5, 2013, Claimant filed his own Motion for Sanctions, which Respondents opposed. After a November 11, 2013, PHC, Claimant's Request and Motion were denied. 

Getting Abusive

Among other matters handled during the November 11th PHC, Respondents submitted a Motion to Dismiss Based on Discovery Abuse, but consideration of that motion was deferred until the first evidentiary hearing

On December 9, 2013, prior to the start of the evidentiary hearing, the Arbitrator heard oral argument on Respondents' Motion to Dismiss Based on Discovery Abuse, which the Arbitrator denied; however, the Decision explains that:

In its place, the Arbitrator imposed an adverse inference in the form of a heightened standard of proof for Claimant. Ultimately, Claimant failed to prove his case even under a normal preponderance of the evidence standard.


The FINRA Arbitrator denied Claimant Poling's claims in their entirety and found him liable and ordered him to pay to Respondents $1,000 as a sanction of discovery abuse (in addition to the prior $300 sanction that was paid). Additionally, the Arbitrator recommended the expungement of the matter from Respondent Kinkead's CRD based on a finding that:

Claimant lacked any credibility and his claim was false when considered against the testimony and evidence presented.

Bill Singer's Comment

Would a lawyer have made a difference for Claimant Poling?  Hard to say --- what is likely, is that a lawyer would have increased Claimant's costs in the form of legal fees.  Maybe this was simply a flawed case that even the finest lawyer could not have pulled out a victory. On the other hand, maybe this case was mishandled by a public customer who represented himself and, in exacerbating things, he prompted an arbitrator to tack on sanctions for discovery abuses. We don't know. All we can do is guess.

An interesting and unusual aspect of this case was that the FINRA Arbitrator "imposed an adverse inference in the form of a heightened standard of proof for Claimant." Frankly, I'm not exactly sure what that means; and, more to the point, I'm not exactly sure that such a act will survive an appeal (which may or may not occur here). On what basis did the FINRA arbitrator arrogate to himself the prerogative to enhance the legal standard of proof in an arbitration? Assuming that the standard of proof was a "preponderance of the evidence," to what, exactly, was that standard raised . . . "beyond a reasonable doubt?"  As noted in the Decision, however, the FINRA Arbitrator found that Claimant Poling had not satisfied the preponderance standard, and such a disclosure may well appeal-proof the case. Notwithstanding, it may have be appropriate for the Decision to specify exactly what constituted the so-called heightened standard and the legal basis on which it was premised.

I also took note of the FINRA Arbitrator's stark language when he found that Claimant Poling "lacked any credibility." Now that's one hell of a hurdle for any party to overcome in litigation.  Beyond the credibility factor, the FINRA Arbitrator concluded that Poling's claim were false.  Wow . . . not only is Claimant found lacking in credibility but his case is found to have been premised on falsehood.  Not exactly a winning combination as the outcome here demonstrated.

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