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You just watched a 12-round world heavyweight boxing match. It went the distance. You could argue that either fighter won -- it was that close. The ring announcer says that the three judges declared the challenger the victor. Half the audience is outraged. The other half is elated. The Press clamors for the breakdown: how many points were awarded in each round? The announcer says that the cards will not be released. The points awarded per round will not be disclosed. Chaos erupts as chairs start flying into the ring. Now, let's consider a recent FINRA intra-industry Arbitration. Yeah, I know, that's one hell of a segue.
Case In Point
In a Financial Industry Regulatory Authority
("FINRA") Arbitration Statement of Claim filed in July 2017, Claimant
Taylor asserted breach of contract (employment agreement and deferred
compensation and severance), age discrimination in violation of the Age Discrimination in Employment Act ("ADEA"), NY
Human Rights Law ("NYHRL"), and NYC Civil Rights Law ("NYCRL"). Claimant Taylor sought:
$200,000 plus interest for the alleged breach
of the Employment Agreement when the firm purportedly failed to pay his 2015 bonus;
$281,403 plus interest for the alleged breach of the Deferred Compensation Plan when the firm purportedly failed to pay his accrued deferred comp;
$300,000 plus interest for failure to pay severance;
interest, attorneys' fees, punitive
damages, and liquidated damages for unlawful discriminatory conduct in
violation of the ADEA, NYHRL, and NYCRL; and
costs, fees, and disbursements.
In the Matter of the FINRA Arbitration Between William
Patterson Taylor, Claimant, vs. SG Americas Securities, LLC, Respondents (FINRA
Arbitration 16-01976, July 28, 2017).
Respondent SG Americas generally denied the allegations and
asserted various affirmative defenses.
The FINRA Arbitration panel found Respondent SG Americas Securities liable and ordered it to pay to Claimant Taylor $200,000 in
compensatory damages. In rendering said award, the FINRA Arbitration Decision states that "Claimant's statutory claims, each and all, are denied."
Bill Singer's Comment
Consider this case a poster boy for everything that I detest about FINRA's mandatory intra-industry arbitration. For starters, we know nothing about anything that gave rise to Claimant Taylor's filing his claims against his former employer Respondent SG Americas Securities. Let me tick off some more of what we don't know from the judges of this fight:
How much of a bonus did Claimant assert he had earned in 2015 and what, if any amount, did Respondent pay?
If Respondent declined to pay all or part of a 2015 bonus, what were the reasons?
How much deferred compensation did Claimant assert he had earned and what, if any amount, did Respondent pay?
If Respondent declined to pay all or part of the disputed deferred compensation, what were the reasons?
How much severance did Claimant assert he was entitled to and what, if any amount,
did Respondent pay?
If Respondent declined to pay any or all severance, what were the reasons?
What were the elements of Claimant's alleged claims of discrimination?
As I often note with these intra-industry employment disputes, I fully appreciate that either party or both parties may have a vested interest in keeping aspects of the underlying events and conduct confidential. There could be embarrassing aspects that Claimant may prefer not to disclose -- and which would only further victimize a victim. There may be an understandable proprietary desire to not disclose the composition of a given employment title's compensation factor so as to retain flexibility with an employer when it comes to negotiating same.
After some 35 years on the Street, it would be difficult for me not to be aware of such motives to keep things confidential. I get it. I don't necessarily criticize the lack of revelation. That being said, if there has been a motion for confidentiality or a stipulation in that regard, a FINRA Arbitration Decision should disclose it. In the absence of such a recitation, the non-disclosure comes off as a somewhat dismissive response by the arbitrators or, worse, a disturbing example of an inappropriate effort to protect FINRA member firms/employers from the appropriate publicity of misconduct raised in the claims of an associated person/employee.
Keep in mind that FINRA is a member-only regulator and that its members are exclusively firms. No associated person had any vote on FINRA's rules. No associated person was asked to vote on whether he or she should be forced to arbitrate against their former employer only before a FINRA arbitration panel. It's just not an alternative-dispute-resolution pathway that smacks of legitimacy given those concerns.
To better understand my concerns about this Decision, consider that Claimant Taylor won an Award. The inference from that result is that the arbitrators found merit in some of his claims. Okay, so, you tell me, what exactly did the arbitrators find merit in and why? Go ahead, re-read the above content; in fact, go find the full-text original FINRA Arbitration Decision and read it yourself. And your answer is what?
Let's read together the totality of the Award portion of the FINRA Arbitration Decision:
After considering the pleadings, the testimony and evidence presented at the hearing, the Panel has decided in full and final resolution of the issues submitted for determination as follows:
1. Respondent is liable for and shall pay to Claimant the sum of $200,000.00 in compensatory damages.
2. Claimant's statutory claims, each and all, are denied.
3. Any and all claims for relief not specifically addressed herein, including attorneys' fees, are denied.
I am going to read the above "Award" statement by the arbitrators very literally. As such, they awarded Claimant Taylor "compensatory damages" in contradistinction to their denial of an award for any "statutory claims." Go ahead, knock yourself out and explain to me what claim(s) that Claimant made that won the $200,000 award. He sought $200,000 plus interest for the breach of Employment Agreement for the non-payment of a 2015 bonus. Okay, great, that's the answer. The arbitrators awarded him the full amount of his unpaid 2015 bonus but declined to award him any interest.
Gee . . . hold on there . . . Claimant Taylor also sought $281,402 plus interest for the non-payment of deferred compensation. Did the arbitrators stiff him on that? If so, why? On second thought, maybe they gave him $100,000 of the $200,000 he sought for his bonus and then another $100,000 of the $281,403 he sought of deferred compensation? Let me re-read and re-re-read the Decision and see if that's clarified. Damn, I'm not sure that my inference is based on anything other than speculation. It looks like the challenger may have landed more blows but, then again, maybe the judges at ringside saw that most of the shots were deflected by the champ. Too bad we never get to see the scoring on the cards.
Then again . . . uh oh . . . I forgot about this . . . Claimant Taylor also sought $300,000 plus interest in severance. Did the arbitrators stiff him on that? If so, why? Not sure how to reconcile the three demands for damages with the panels award of "$200,000 in compensatory damages." $200,000, $281,403, and $300,000 as all or some or none being for "compensatory" damages. I do take into account that none of those three claims raised any statute, so they are not "statutory claims," which were all denied by the FINRA Arbitration Panel. Why did the arbitrators only award $200,000 sans interest in response to three claims for a total of $781,403 with interest? Claimant Taylor asked for unspecified damages plus punitive damages, interest, and fees on his ADEA, NYHRL, and NYCRL statutory claims. The arbitrators make it clear that they denied all the statutory claims but Claimant never attached any specific monetary value to those -- so, once again, how come Claimant won this case but was only awarded $200,000, and what was that compensation for?
I'd call this published Decision sloppy but then that would erroneously be viewed as a criticism of the arbitrators' work product. This is not about the arbitrators. They are following FINRA's arbitration rules, which do not require an explained decision unless duly demanded. The problem with this hide-and-seek approach to mandatory intra-industry arbitration is that it disadvantages the men and women forced to pursue their legal grievance pursuant to a regime created by and maintained by their employers. Imagine that you are contemplating leaving your employer FINRA member firm and think that you have some of the same issues presented in Taylor v. SG Americas Securities, LLC. What lessons would you learn from this FINRA Arbitration Decision?
What did Claimant do right (or wrong) in presenting his case?
Why did the arbitrators reduce the value of his total claims and how might you use that information to better prepare your case?
Did Claimant over-state the fair value of his compensatory claims?
Did Claimant fail to produce some important fact(s) that may have tipped the scales in his favor on his statutory claims?
Is there anyone at FINRA who reads these FINRA Arbitration Decisions and asks if they have disclosed enough so as to provide adequate content and context? Or is it simply that no one at FINRA gives a damn and, at the end of the day, it's more about going through the motions and giving the impression of a credible mandatory arbitration system. When the trolls, and the lackeys, and the apologists for FINRA come out and defend this crap, just keep in mind that everything they say may be correct if the industry's men and women had the "option" of pursuing their intra-industry grievances in a civil court or before any arbitration forum of their choice. They don't. And that difference is what makes all the difference.