Pro Se Stockbroker Wins $435,000 Award In Defamation And Termination Case

June 30, 2016

A former registered representative seeks about $600,000 in damages from his former employer amid allegations of defamation and wrongful termination. It's a familiar refrain; however, that familiarity makes nothing less painful for any former employee.  The disgruntled rep girded for battle and represented himself. That whole pro se thing is often a prescription for disaster but no so this time around. The Claimant walks away with his pockets filled with cash and an expungement of his record.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2015 and as amended thereafter, associated person Claimant Garrity, representing himself pro se, asserted causes of action in "defamation; misconduct; malicious intention; and wrongful termination" in connection with his former employment with Respondent SteelPoint Securities. Ultimately, Claimant Garrity sought $198,390.00 in compensatory damages; $396,780.00 in punitive damages, interest and an expungement of allegedly defamatory language from Uniform Termination Notice for Securities Industry Registration ("Form U5"). In the Matter of the FINRA Arbitration Between Thomas P. Garrity, Claimant, vs. Mario Moretto. SteelPoint Securities, LLC, and Christopher R. Van SteIle, Respondents (FINRA Arbitration 15-00551, June 17, 2016).

Respondents Moretto, SteelPoint, and Van Stelle generally denied the allegations and asserted various affirmative defenses.


The FINRA Arbitration Panel found Respondents jointly and severally to and ordered them to pay to Claimant $434,845.50 in compensatory damages  plus 10% per annum interest until paid in full.

Having found certain cited language on Garrity's Form U5 to be defamatory, the FINRA Arbitration Panel recommended that the Section 3 "Termination Explanation" filed by SteelPoint on January 2, 2013, be deleted and replaced with:

SteelPoint Securities, LLC was winding up its business; and broker rejected change of status from branch office to in-house broker.

The Panel declined to change the "Reason for Termination" but did recommend the revision of the Form U5 to the extent that the "Yes" answers to questions 7B and 7(F)(1) be changed to "No." In order to conform the recommended expungement, the Panel further recommended that the accompanying Internal Review Disclosure Reporting Page and Termination Disclosure Reporting Page be deleted.

SIDE BAR: The applicable Questions on the Form U5:

Note: A "Yes" response will terminate ALL registrations with all SROs and all jurisdictions.

Reason For Termination:
[]Discharged  []Other  []Permitted to Resign  []Deceased  []Voluntary

Termination Explanation:
If the Reason for Termination entered above is Permitted to Resign, Discharged or Other, provide an explanation below:
If amending the Reason for Termination and/or termination explanation, provide an explanation below:

. . .

Internal Review Disclosure
7B. Currently is, or at termination was, the individual under internal review for fraud or wrongful taking of property, or violating investment-related statutes, regulations, rules or industry standards of conduct?

. . .

Termination Disclosure
7F. Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of:
1. violating investment-related statutes, regulations, rules or industry standards of conduct?
2. fraud or the wrongful taking of property?
3. failure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?

Bill Singer's Comment

According to online FINRA BrokerCheck records as of June 30, 2016, Claimant Garrity was first registered in 1979 and was registered with several FINRA members during his career, among which were Paine,Webber, Jackson & Curtis, Smith Barney, Harris Upham & Co., Kidder, Peabody & Co., and others, culminating with his most recent disclosed registration from December 2011 through January 2013 with Respondent SteelPoint. As presently noted on BrokerCheck, Steelpoint indicated that it had "Discharged" Garrity on December 21, 2012.

In light of the FINRA Arbitration Panel's finding of defamation and its recommendation of expungement, Blog will not relate the narrative presently provided in the "Allegations" section of the online report.

A few things to note in this arbitration. First, as usual, the FINRA Arbitration Decision leaves out far more than it includes. Pointedly, we know virtually nothing about the underlying employment dispute that prompted Garrity's discharge by Steelpoint and, thereafter, his lawsuit against the firm. About all the Decision tells us is that Steelpoint had defamed its former employee and that there was some dust-up in terms of the firm "winding up its business; and broker rejected change of status from branch office to in-house broker."

What's missing from this Decision is an explanation as to how the Panel decided that its particular compensatory damage award of $434,845.50 compensated Claimant. What does that total represent? How did the arbitrators arrive at the number? If the arbitrators deemed that Claimant had been defamed, why was there no award of punitive damages?

Keep in mind that Garrity was apparently discharged in December 2012 (about three days from Christmas Eve -- Merry Christmas, Mr. Garrity)  and the Decision is dated June 2016; let's call it about 3 1/2 years from discharge to award. That's a long time to soldier on against a former firm, particularly when you've been on the Street since 1979.  

In the end, we have no idea whether Garrity came away from his arbitration satisfied with the award or not. Given his pro se appearance, he did a commendable job on his behalf and we should keep in mind that he did not incur legal fees, which imputes an even greater net value to his nearly $435,000 award.

Of course, what could be a more suitable song to play us off: