Battle Royal In FINRA Arbitration Steel Cage Match

April 10, 2015

Nothing like a good, old-fashioned, employment battle royal on Wall Street. The industry's version of a Steel Cage match in which nearly anything goes. In today's combat, we have a kitchen sink of allegations thrown against four respondents, who then tag team and go after three third-party respondents. Eight combatants in the ring at one time. In the end it's all somewhat entertaining, even if no clear winner emerges.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2012 and as amended thereafter, Claimant Cassese asserted breach of contract, misrepresentations, failure to pay commissions, assessment of fraudulent, unnecessary, and inflated fees, and illegal wage deductions compensation under New York State Labor Law Article 6 § 193: Deduction of Wages, breach of non-solicitation agreement, and wrongful withholding of wages. Claimant  ultimately requested compensatory damages in the amount of $990,000 and statutory assessment of attorneys' fees and 25% liquidated damages remedy on the amount of illegal wage deductions, costs, expenses, and forum fees. In the Matter of the FINRA Arbitration Between Barry F. Cassese, Claimant / Counter-Respondent, vs. Morgan Wilshire Securities, Inc., Michael John Finnan, Edward Charles Maher, and Paul John Metz, Respondents / Counter-Claimants/Third-Party Claimants -AND -K.C. Ward Financial, Charles Carrillo, and Louis Ward, Third-Party Respondents ( FINRA Arbitration #12-01916, March 20, 2015).

Respondents Morgan Wilshire, Finnan, and Metz generally denied the allegations made in the Statement of Claim and asserted various  affirmative defenses. 


Respondent Morgan Wilshire asserted in a Counterclaim and as amended causes of action against Cassese of negligence, failure to perform services in the manner required for a licensed securities agent, indemnification, wrongful solicitation and transfer of company's proprietary property, wrongful conversion of the company's accounts and clients. Counter-Claimant Morgan Wilshire ultimately sought compensatory damages in the amount of $780,000.00, posting of a bond or a letter of credit with a licensed institution of not less than $270,000, costs, attorneys' fees, arbitration fees,

Third-Party Claim

Additionally, in a Third-Party Claim and as amended, Morgan Wilshire asserted wrongful conversion and ultimately requested compensatory damages in the amount of $250,000.00 from each Third-Party Respondent, costs, attorneys' fees, and arbitration fees

One Out

All parties were represented by counsel except for Maher, who appeared pro seIn August 2014, Claimant Cassese dismissed with prejudice all claims against Respondent Maher. 


The FINRA Arbitration Panel found

Respondent Finnan is liable for and ordered him to pay to Claimant Cassese $300,000 in compensatory damages; and

Claimant Cassese is liable for and ordered him to pay to Respondent Morgan Wilshire $374,955 in compensatory damages in the amount of $374,955.00.

Bill Singer's Comment

Not noted in the FINRA Arbitration Decision is the colorful history of Claimant Cassese, who, according to FINRA's online BrokerCheck records as of April 3, 2015, was first registered from April to July 1991 with the expelled FINRA member firm Stratton Oakmont; and, thereafter, he was registered with Lew Lieberbaum, Sovereign Equity Mgmt. E.C. Capital, Walsh Manning Securities,Morgan Wilshire Securities, and K.C. Ward Financial. According to his BrokerCheck report, from 1995 through 2013, Cassese amassed 14 "Disclosure Events," which break down to 
  • 4 "Final" Regulator events and 
  • 7 "Settled" Customer Disputes;
  • 1 "Pending" Customer Dispute; and 
  • 2 Customer Disputes that went to "Award Judgment."
Throughout Cassese's nearly two decades on Wall Street with 7 FINRA member firms, BrokerCheck does not dislcose that he was ever "Discharged" by any employer.


As part of my law practice, I represent whistleblowers, and for several years, I have been representing one such client before the Securities and Exchange Commission ("SEC") and dealing with the federal regulator's Office of the Whistleblower ("OWB"). Frankly, the experience has been incredibly frustrating. I simply cannot persuade the OWB that it needs to adjust its mind-set and understand that my client is not an adversary or a defendant/respondent in a criminal/regulatory case. If OWB's attitude doesn't change, it will undermine the SEC's Whistleblower Program and dissuade informants from coming forward and deter lawyers from representing those individuals on a contingency basis.

As a former regulator with two Wall Street self-regulatory organizations, I fully understand and respect the need for prosecutors and regulators to scrupulously maintain whatever confidentiality is mandated for investigations and trials/hearings. Since I represent individuals and entities that are often industry defendants/respondents and I also represent defrauded public customers, I am particularly vested in ensuring that the regulatory and criminal justice processes remain legal and ethical. I understand the rules of the game and I honor the rulebook. It is in that spirit that I urge the SEC to implement more deadlines within its Rule 21F. Also, I urge the SEC to investigate its Office of the Inspector General ("OIG") and determine whether the use of third-party service providers is appropriate for the intake of complaints directed to that office. READ