In the early morning hours of January 12, 2016, BrokeAndBroker.com Blog publisher Bill Singer dug deep into the fearsome arsenal of stock market tools and extracted a potent weapon in the war against negative sentiment, corrections, and bear markets. With great care and a sense of urgency, Singer posted the live 1969 Woodstock performance of "Everything's Gonna Be Alright" by the Paul Butterfield Blues Band. "EMPLOYMENT TUESDAY At BrokeAndBroker.Com With Paul Butterfield Blues Band Mojo" (BrokeAndBroker.com Blog, January 12, 2016). Some scoffed -- okay, almost everyone scoffed. Singer, however, didn't scoff because he is allergic to scoff and can't go near the thing. In any event, scoffing aside, once Singer had unleashed the juju and mojo of the mystical performance upon the stock market, the powers of the Universe aligned and by day's end the Dow Jones Industrial Average posted a 117.65 point gain and the S&P 500 had posted a similarly stunning 15.01 move to the upside.
In the afterglow of the Butterfield Effect, Bill Singer acted responsibly to contain the unleashed forces and restore equilibrium and balance. The video must now be returned to the deepest crypts of Fortress Singer and protected against misuse by evildoers. BrokeAndBroker Blog readers should be assured that this restoration process will be completed prior to today's market open. The Butterfield Genie will be pushed back into its bottle.
Given the likely withdrawal effects of this action, Singer is posting one last video designed to moderate the market undulations emanating from the Butterfield Effect. If successful, this new video performance of the Led Zeppelin hit "Kashmir" by the Louisville Leopard Percussionists, will restore order to the markets:
Oh, I been flying... mama, there ain't no denyin'
I've been flying, ain't no denyin', no denyin'
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The Promissory Note Arbitration
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2015, FINRA member firm Claimant Feltl and Company sought $25,000 in compensatory damages, interest, attorneys' fee, and costs in connection with its attempt to recover an alleged balance due on a promissory note issued to its former employer Respondent Czupek. In the Matter of the FINRA Arbitration Between Feltl and Company, Claimant, vs. Brian Edward Czupek, Respondent(FINRA Arbitration 15-00346, January 4, 2016).
Respondent Czupek generally denied the allegations and asserted various affirmative defense.
A Word From Bill Singer
How ya doin'? Hope all is well. Listen, it's still pretty early in the new year and I don't want to get all red in the face and start spitting as I complain about another FINRA Arbitration Decision. That being said, getting angry gets my blood moving and at my age, that's not such a bad thing. In fairness, however, let me allow the Decision to speak for itself:
This is the entire "Case Summary" section from the FINRA Arbitration Decision:
Claimant asserted the following cause of action: breach of promissory note. The cause of action related to Claimant's allegation that Respondent failed to repay the balance due on a promissory note after his employment with Claimant terminated.
Unless specifically admitted in his Answer, Respondent denied the allegations made in the Statement of Claim and asserted various affirmative defenses.
So . . . what do we have here? Frankly, it sets up as nothing more than a garden-variety promissory note arbitration. After the employee's registration with the member firm is terminated, there is purportedly a balance due on his promissory note and the firm sues to recover. Similarly, the former employee denies that he owes the repayment and raises his defenses.
Frankly, ho hum. As we should all anticipate, this is not going to end well for the employee.
This is the entire "Award" section from the FINRA Arbitration Decision:
After considering the pleadings, the testimony and evidence presented at the hearing, the Arbitrator has decided in full and final resolution of the issues submitted for determination as follows:
1. Claimant's claims are denied in their entirety. The Arbitrator finds that the promissory note was ambiguous about payment requirements when Respondent's termination was not for one of the specified causes.
2. Any and all relief not specifically addressed herein, including attorneys' fees, is denied.
Bill Singer's Commentary
I mean, seriously? Are you kidding me?
We are presented with a very unusual FINRA arbitration result in which the sole FINRA Arbitrator denies not just some but all repayment of the alleged principal on the promissory note and we have virtually no clue as to how that decision was reached. Oh, sure, we're told that the note was "ambiguous about payment requirements when Respondent's termination was not for one of the specified causes," but what the hell does that mean?
For starters, I truly would have loved to have been presented with the language of the note wherein "cause" was characterized (if, in fact, there was such a provision). As a veteran industry lawyer, I find it somewhat shocking that a promissory note would not result in an immediate acceleration of repayment upon termination of registration. That's not to suggest that someone failed to properly draft the agreement underlying the note but it is to suggest that most notes are subject to repayment upon termination of registration or other specified causes.
Ultimately, as with far too many FINRA Arbitration Decisions, I am frustrated by the lack of content and context. This is a surprising victory for a registered representative and there may well be important lessons for member firms in drafting enforceable promissory notes and for registered representatives in escaping repayment of said note; however, we come away with virtually no understanding of the underlying facts and circumstances, and little understanding of the arbitrator's rationale. I would urge FINRA to review this published decision and ask itself if this is the best "quality control" that the organization offers.