Five Not So Easy Thought Pieces About Pro Se FINRA Arbitration

November 9, 2017

You got your five easy pieces. Then you got your five not-so-easy thought pieces about Wall Street employees representing themselves in FINRA arbitrations against their former employers. In today's featured Blog commentary, our publisher Bill Singer, Esq. dissects a fairly mundane pro se Claimant's case against TIAA-CREF. Bill asks important questions about the pros and cons of such amateur hour lawsuits. If your finances are such that you can't afford a lawyer, consider some of the issues raised in the article.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in October 2016, pro se Claimant Waters asserted wrongful and discriminatory termination, and damage to professional reputation/defamation. Claimant sought unspecified compensatory and punitive damages plus re-employment. In the Matter of the FINRA Arbitration Between Allen Rodney Waters, Claimant v. TIAA-CREF Individual & Institutional Services, LLC,, Respondent (FINRA Arbitration 16-03090, October 31, 2017).

Respondent TIAA-CREF generally denied the allegations and asserted various affirmative defenses.

Insufficient Evidence

At the conclusion of Claimant Waters's case-in-chief, Respondent TIAA-CREF moved to dismiss, which Claimant opposed. The FINRA Arbitration Panel granted Respondent's motion and dismissed the claims. In explaining the rationale for its decision, the Panel provided the following:

[C]laimant presented insufficient evidence to support his claim. With respect to his claim of wrongful termination, Claimant was an at-will employee and under Massachusetts' law, an at-will employee can generally be fired for any reason and for no reason at all. While the state law recognizes an exception where the reason for termination in unrelated to any legitimate corporate interest, the reason for discharge here was clearly related to Respondent's interest, since Claimant's conduct put Respondent at risk of violating SEC rules and consequently suffering severe penalties.

Regarding Claimant's allegation of defamation by the termination explanation provided in his Form U5, the Form U5 is subject to an "absolute privilege" under Massachusetts law. . .

The FINRA Arbitration Panel dismissed Claimant Waters's claims

Bill Singer's Comment

In the heat of anger after being fired from a job or forced out, many employees decide to hire a lawyer and sue -- and then focus largely on how much it's going to cost and how long it's going to take. In my law practice, I frequently warn clients about the dangers of suing and losing. Also, I often discuss the wisdom (when appropriate) of simply getting on with your life. Without question, there are times when a former employee should and must sue in order to preserve her professional reputation, obtain an expungement, or be awarded just and fair damages. There are other times, however, when the costs of litigation are not justified and the benefits of a lawsuit are not always outweighed by the risks.

Lawyers are in the business of charging retainers and then hourly billables. So . . . when a lawyer suggests that it may not be in a client's best interest to pursue a lawsuit, that's a bit of advice to be carefully considered. Lawyers are not always right with their opinions, and, on top of that, many litigants claim that they are suing as a matter of principle and simply want to send a message or jerk the other party around. As such, lawsuits don't always involve common sense. Keep in mind that a lack of common sense, however, is often the cause of most lawsuits.

Before I embark upon offering some thoughts about Waters v. TIAA-CREF let me clearly confirm that I know NOTHING about the underlying workplace issues or the attendant nature of the termination. Consequently, my thoughts are merely prompted by the issue of a pro se industry litigant suing a former employer and losing his case.

According to Waters BrokerCheck records as of November 9, 2017, he was first registered in 1982 and was registered with TIAA-CREF from November 2005 to April 2014. Oddly, Waters and I are both 35-year industry veterans. Waters is an older industry participant and he may well have deeply and sincerely felt that he had been screwed by his former employer. Other than a minor financial compromise with a creditor, Waters's BrokerCheck file is spotless, so we're dealing with someone with no history of customer complaints, criminal convictions, or anything else requiring disclosure. For a three-decade-plus industry veteran, he's about as much of a choirboy as you could expect.

Whatever transpired and went wrong between Waters and TIAA-Cref, we'll just call it "X." As a result of X, the former employer terminated the former employee. That termination apparently occurred in a manner that angered Waters and struck him as defamatory and discriminatory.  For whatever reason -- financial or by preference -- Waters opted to represent himself in his lawsuit against his former firm.

Which leads us to the first thought-piece for today: Should you sue a former employer without a lawyer?

Sometimes, the motivation for going pro se is that lawyers are just too damn expensive and you can't afford the requested Retainer and you sure as hell don't have the bucks to pay hundreds of dollars an hour in billables plus thousands more in costs and expenses. Either you represent yourself or you get on with your life. If you move forward representing yourself, you may well reason that you've watched Law & Order for years and you want your day in court and if you have to represent yourself, at least you'll go down fighting.

If you can't afford a lawyer or simply choose to represent yourself, make sure that you have factored into that decision the risk of losing your case and having to pay filing fees, hearing costs, expenses, and attorneys' fees for the other side. On top of that, do you have exposure that could warrant your adversary filing counter-claims and asking for damages against you? Amateur hour may be fun but it is not always without cost.

Which leads us to the second thought-piece for today: Do you know what you need to prove and how to prove it?

In Waters's case, the three FINRA arbitrators stated that he had "presented insufficient evidence to support his claim." It may be that there wasn't any evidence to support Waters's claim and he did as well as any high-priced lawyer would have. Then again, it may have been that Waters's lacked the skills necessary to present the evidence required to prove his claim. All of which may be nothing more complicated then a guy can only do what a guy can do.

In terms of proving his claim of wrongful termination, we don't know from the FINRA Arbitration Decision whether Waters was aware that he was subject to the "At Will" doctrine. Even if he was an at-will employee, there may have been certain facts that he could have argued or presented that might have constituted legal exceptions to that doctrine. Getting back to that X factor, we can only speculate as to what had happened, whether any of it rose to the level of a winnable claim for damages, and if a savvy lawyer may have prevailed. There isn't any on-the-job-training for a pro se litigant in the midst of a FINRA arbitration. If you don't know what to do going in, you're likely not going to get the chops while fumbling through a cross examination or trying to introduce (or object to) evidence.Then again, a lawyer may cost $50,000 and the awarded damages may be $5,000 -- so you could come out a loser either way.

Which leads us to the third thought-piece for today: Are you requesting all available remedies in your Complaint?

Waters alleged that he had been defamed by the termination explanation on his Form U5 and sought damages as a result. The FINRA Arbitration Panel deemed the U5 as absolutely privileged and denied the claim. There is no indication that Waters requested an expungement or revision to the termination explanation. Perhaps the arbitrators may have entertained some proposed rewriting of the language on the U5 if Waters had better presented his case and was able to demonstrate that the cited language was defamatory or untrue. Then again, the facts may simply have been against Waters from the start and the outcome was correct. A lawyer may have made a difference here -- or may not have.

Which leads us to the fourth thought-piece for today: Are you embarking upon a lawsuit that could exacerbate your situation?

The FINRA Arbitration Decision sets forth the claims and defenses in a fairly generic and formulaic manner. The Decision is silent as to the specifics of the workplace or termination issues in dispute. Unfortunately, the three arbitrators published a finding that Waters's conduct:

put Respondent at risk of violating SEC rules and consequently suffering severe penalties.

That unflattering finding asserts that Waters did something wrong that put his former firm at risk of violating federal securities rules and could have resulted in the imposition of significant financial sanctions and other regulatory undertakings. Up until the publication of that finding by three independent FINRA arbitrators, Waters retained some ability to spin and control the narrative of events in his favor. Now that there is a public FINRA Arbitration Decision, Waters loses the ability to depict the subject events in a more favorable light.

Just imagine that Waters is interviewing for a job and a potential employer does an online search and comes across Waters v. TIAA-CREF. That disclosure  not only states that Waters had sued a former employer (never a big selling point during an interview with a potential successor employer) but also notes that his actions put that former employer at risk of violating industry rules and being hit with "severe penalties." That's as classic a case of exacerbation as I can think of. Given Waters veteran industry status, he may well be able to downplay the seriousness of his failed arbitration. On the other hand, younger stockbrokers with less experience may find that such a disclosure has more impact upon a future hiring decision. All of which underscores the somewhat useless advice that if you're going to sue, you better make damn sure that you win.

Which leads us to the fifth thought-piece for today: How much justice can you afford?

One suggestion for those who can't afford a lawyer's services from the preparation of the Complaint through verdict is to consider alternatives. You may be able to hire a lawyer to:

  • draft your pleadings and motion papers or
  • review and comment on your drafts or
  • counsel you during a pre-hearing session or
  • help you prepare for a hearing or
  • represent you at the hearing sessions or
  • provide you with ongoing counsel in a consulting capacity.
If you can't afford a veteran arbitration lawyer looking to charge you $1,000 an hour, you may be able to afford a competent lawyer who only recently went into private practice and is willing to negotiate a flat fee on a competitive basis. Sometimes you may simply benefit from having a lawyer with some litigation skills at your side even if that individual lacks extensive experience -- and, yes, sometimes you may be better off representing yourself if the only lawyer you can afford has no idea what FINRA is and thinks that U5 is fronted by Bono. Whatever you decide, just make sure to give it some thought.