Defamed PNC Employee Wins Dramatic Expungement

September 20, 2016

For many men and women employed on Wall Street, getting fired is more than the mere loss of a job. Depending upon how the firing is memorialized in various so-called regulatory disclosure documents, a discharge could be the end of a career. If you're one of the "lucky" ones who got fired because of nothing more onerous than corporate downsizing or the closing of an office, those factors may not pose much of an issue during interviews for your next job. On the other hand, if you resigned amid a cloud of allegations of misconduct or were terminated for cause, potential employers may have all sorts of questions; and even if a manager recommends your hiring, the suits upstairs in legal and compliance may put the kibosh on any offer. Given the costs and time involved in fighting what is often called a "wrongful termination," many industry employees simply sulk off into a corner to lick their wounds. For some disgruntled employees, however, righting the wrongs of their discharge becomes the legendary "matter of principle." In a recent FINRA arbitration, one former PNC employee girded for battle and several windmills are all the worse for the encounter.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2015, former PNC registered representative Claimant Gross, asserted defamation, libel, misconduct, wrongful termination, and wrongdoing in connection with the termination of his employment. Ultimately, Claimant Gross sought $53,370.49 in compensatory damages, $22,172.50 in attorneys's fees, interest, and costs. Additionally, Claimant asked for an expungement of matters related to his termination from his Central Registration Depository records ("CRD") In the Matter of the FINRA Arbitration Between John Gross, Claimants, vs. PNC Investments, Respondent (FINRA Arbitration 15-01071, September 2, 2016).

Respondent PNC generally denied the allegations and asserted various affirmative defenses.


The FINRA Panel of Arbitrators found Respondent PNC liable to and ordered it to pay to Claimant Gross

  • $102,413.00 in compensatory damages with 6% interest until paid in full;
  • $22,172.00 in attorneys's fees;
  • $375.00 reimbursement for FINRA arbitration filing fee.

In recommending expungement based upon a finding of defamation, the Panel explained:

[T]he Panel recommends the expungement of the Termination Explanation in Section 3 of Claimant John Gross's (CRD # 5635293) Form U5 filed by PNC Investments . . .

. . .

[T]he Panel recommends that the language be expunged in its entirety and replaced with the following language: "A FINRA arbitration panel determined that the termination of John Gross by PNC Investments was arbitrary and unreasonable."

The Reason for Termination shall remain the same. The above recommendations are based on the defamatory nature of the information. These recommendations apply to all subsequent disclosures concerning this event, including but not limited to, the Form U4 filed on 01/11/2016 by Northwestern Mutual Investment Services, LLC in which the panel recommends that the "Yes" answer to Question 14J(1) be changed to "No" and the accompanying Termination Disclosure Reporting Page be deleted in its entirety.

The applicable questions on the Uniform Termination Notice for Securities Industry Registration ("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:

The applicable questions on the Uniform Application for Securities Industry Registration or Transfer ("Form U4"):
Termination Disclosure

14J. Have you ever voluntarily resigned, been discharged or permitted to resign after allegations were made that
accused you 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 

Bill Singer's Comment

Claimant Gross emerges as the clear-cut winner in this bout. Unlike many cases that are reported in the Blog, this is a KO in favor of the former registered rep. In finding in Claimant's favor, the arbitrators awarded him damages, interest, and fees plus the all-important expungement.The former employer is unconscious on the canvass, bleeding profusely, and counted out.

As to the parameters of the recommended expungement, the FINRA Arbitration Panel found that PNC's termination disclosures had defamed Gross. The defamation was apparently so glaring that the arbitrators chucked the "Termination Explanation" into the garbage and replaced it with a commentary that slams the former employer for being "arbitrary and unreasonable" when it came to terminating Claimant. Moreover, although we are never presented with the challenged wording of the U4 or U5, we can infer from the Panel's decision to strike the "YES" answer and attendant explanation to the previously filed Form U4 Item 14J(1) that PNC had likely indicated that it had fired Gross based upon allegations of misconduct rising to violations of industry regulations, rules, or standards. The arbitrators found no veracity with the reasons presented for PNC's termination of Gross.

Then there is the monetary award aspect of this case, which, I must admit, is puzzling. So puzzling, in fact, that I read and re-read and re-read yet again the FINRA Arbitration Decision to make sure that I had not misread Claimant's various damages demands. In Claimant Gross's Statement of Claim, he purportedly asked for what the Decision characterizes as "Unspecified" damages, costs, and fees. The Decision further advises that "At the close of the hearing" and, then again, "In his post-hearing submission," Claimant requested:

Compensatory Damages $53,370.49
Interest Unspecified
Attorneys' Fees $22,172.50
Other Costs Unspecified
Other Monetary Relief Unspecified

Okay, you tell me, how does a Claimant request $53,370.49 in compensatory damages but a FINRA Arbitration Panel renders an award of $102,413.00 in compensatory damages? We're talking about an Award that's almost double of what was sought! Pointedly, I am not criticizing the arbitrators for making such an Award and I fully appreciate the circumstances that may have prompted that amount -- I just wish that there was some explanation for the dollar amount in the Decision.

In conclusion, a special thank you to Claimant Gross for fighting the good fight. Compliments to Claimant Gross's lawyer, Michael J. Elliott, Esq., Scanlon & Elliott, Akron, Ohio. What a glorious quest!