No-Call Customer Policy Cited In Fidelity Employment Dispute

December 8, 2014

You join a firm. You work there. At first, it's wonderful but, as these things often go, the wonderful fades and you begin to think of moving on. Then you learn of another opportunity, one which seems better than your present arrangement. At this point, it gets dicey. You think you have the right to compete with your former firm. Your former firm thinks that your idea about competition is based on a whole lot of illegal and tortious conduct, all of which gives rise to allegations that you stole confidential information and used it to talk smack about your former firm in an effort to get your accounts to transfer. Then, for good measure, someone at the former firm writes some nasty stuff on your Form U5 -- you say it's all lies but they say it's the truth. In today's Blog, we consider a case in which many of the issues noted above get played out at an arbitration hearing.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2014, FINRA member firm Fidelity asserted breach of employment contract and misappropriation of trade secrets against former associated person Busch. Claimant Fidelity alleged that following Respondent Busch's termination, she took customer information and wrongfully used that information to unlawfully contact and solicit the firm's customers to transfer the management of their accounts to Busch at Respondent Executive Wealth. Damages sought were not specified. In the Matter of the FINRA Arbitration Between Fidelity Brokerage Services, LLC, Claimant, v. Suchitra Sampath Busch and Executive Wealth Management, LLC, Respondents - AND -- Suchitra Sampath Busch, Counter-Claimant, v. Fidelity Brokerage Services, LLC, Counter-Respondent (FINRA Arbitration 14-00545, December 2, 2014).

Serial Dialing

Busch filed a Counterclaim against Claimant Fidelity seeking an expungement of this matter from her record. As to more substantive issues, according to the FINRA Arbitration Decision, she asserted that:

[S]he was given the opportunity to resign from Claimant's employ due to the way she elected to suppress workflow notification by not serial dialing customers that neither wanted nor needed unsolicited telephone contacts from a Fidelity advisor. Busch stated that no customer complaint or regulatory complaint was ever issued formally or informally to Fidelity Brokerage regarding her actions.

In March 2014, the parties notified FINRA that they had resolved their issues about an injunction and submitted an Agreed Upon Permanent Injunctive Order, which the Panel executed such in April 2014.

SIDE BAR: There are a number of aspects of the arbitration Decision that leave much to be desired. Without any prior explanation, we are informed that some "injunction" issue had existed but that the parties resolved that dispute and submitted a proposed order addressing a "permanent" injunction. Ummm  . . . like, what the hell are you talking about? What kind of an injunction? Where was the injunction ordered (assuming a preliminary one existed, was that via court or FINRA)? What were the terms of the permanent injunction? Who and what was enjoined?

Expungement Hearing

In July 2014, the parties filed a Stipulation to and Joint Request for Telephonic Hearing of Up to Two Hours in Lieu of a Full Hearing. The parties notified FINRA that they had settled Claimant's claims for damages and requested a telephonic hearing on Busch's request for an expungement or modification of her Uniform Termination Notice for Securities Industry Registration ("Form U5"). The FINRA Arbitration Panel dismissed with prejudice the withdrawn claims of Claimant Fidelity. 

On or about August 29, 2014, Busch, filed an Unopposed Motion for Leave to File a Counterclaim, which was granted by the FINRA arbitrators. Thereafter, in September 2014, the Panel held a telephonic hearing on the requested expungement. 

SIDE BARAccording to FINRA's BrokeCheck online records as of December 8, 2014, Busch was first registered in the securities industry in 1993 and has no history of customer complaints or regulatory sanctions. Respondent Fidelity indicated that on October 8, 2013, Busch was "Permitted to Resign" based upon:


In considering Busch's expungement request, the Panel noted in the Decision:

2. ) The Panel has determined that the Respondent, Suchitra Sampath Busch's U5 is in fact accurate. The Panel recommends the Termination Explanation in Section 3 of Suchitra Sampath Busch's CRD#2248702) Form U5 dated November 6, 2013, filed by Fidelity Brokerage Services, LLC and maintained by the Central Registration Depository ("CRD") be supplemented with the following "Employee logged outbound customer calls where none occurred for customers who had previously indicated they did not wish to receive periodic calls from Employee. It was Employee's belief that this methodology was the only mechanism by which she could manage the Siebel system that lacked ability to categorize such customers into a "no call" classification to avoid daily dashboard reminders." This recommendation also applies to Section 4 of the foregoing Form U5s, Termination Disclosure Reporting pages.

Bill Singer's Comment

Possibly buried among the broad brushstrokes and missing commentary in the FINRA Arbitration Decision may be a somewhat serious allegation by Fidelity that its former employee Busch had improperly taken confidential customer information after departing the firm, and that she had contacted customers seeking to induce them to transfer their accounts to her new firm. Frankly, that's the bread-and-butter nature of most of these post-employment disputes. Unfortunately, the Decision doesn't shed much, if any, light on this aspect of the parties' dispute; notwithstanding that it appears that some injunction pertaining to Busch's further contacts with her former accounts at Fidelity became the subject of an injunction . . . or didn't . . . or only to some extent . . . to, frankly, your guess is as good as mine. 

If you delve between the lines and parse through the few words in the Decision that address the underlying facts in this employment dispute, it appears that Busch asserted that the so-called fabricated outgoing calls were logged in by her as part of her effort to short-circuit an in-house monitoring system that would not accept the classification of "No Call" for customers who had indicated to Busch that they no longer wanted periodic calls. As best I can infer from the sparse presentation of facts in the Decision, Busch was arguing that she felt compelled to telephone certain customers who had specifically informed her that they did not wish to be called -- and that her only way to remove those customers from Fidelity's in-house monitoring system was to game the computer program by pretending that she had telephoned those folks. That all sounds like a massive case of employee frustration with an office policy that no one seems willing to redress. 

Having been on the receiving end of far too many disruptive evening telephone calls to my residential "Do Not Call"-registered number, I can only imagine how some Fidelity customers might feel after telling a registered person to stop contacting them but the calls persist.  If, in fact, Busch had concluded that feeding garbage into a computer system was the only way to get around her employer's insistence on the disputed periodic calls to individuals who had told her to stop,  then it would seem to me that there were alternatives to citing that conduct as an "allegation" supporting Busch's registration termination.  There is also a question as to whether FINRA's regulatory arm should now investigate whether Fidelity is compliant when it comes to respecting its client's instructions to leave them alone.