FINRA Arbitrator Holds Public Customer Claimant In Contempt

December 13, 2017

I'm one of those cranky bastards who doesn't like to be kept waiting. If I have an appointment, I tend to arrive a bit early. My time is valuable -- as is yours; worse, I make a living by charging by the hour. Consequently, when I came upon a recent FINRA arbitration in which a public customer had filed his lawsuit in 2015, I understood the likely seething anger of the FINRA arbitrator, the respondents, and their lawyers when Claimant attempted to cancel a previously scheduled hearing the day before it was to be conducted. To be clear and fair, life is messy and sometimes we are forced to deal with stuff that requires us to move meetings or cancel appointments. On the other hand, if you're going to ask for a last-minute cancellation of an event where numerous other folks have altered their schedule in response to your lawsuit, you sure as hell better have a compelling reason. Moreover, even if a party can't make it to the hearing, his or her lawyer should at least extend the courtesy of showing up to offer apologies and explanations. Consider a recent FINRA arbitration in which a whole mess of folks are sitting on their hands in Minneapolis, Minnesota on October 24, 2017, waiting for a Claimant and his lawyer to appear at a FINRA arbitration.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2015 and amended thereafter, public customer Claimant Drake asserted churning ("quantitiative suitability"), suitability, unauthorized trading, negligence, breaches of fiduciary duty and contract, misrepresentation, financial exploitation of the elderly, disciplinary history and failure to supervise, lost opportunity damages, and disgorgement ("quantum meruit"). Claimant Drake alleged that Respondents Rockwell, Guarino, Stifelman, Salamone, Severinsen, and Sheehan had invested him in risky exchange traded funds and stocks, among which were Green Mountain Coffee Roasters, Inc., NetApp, Inc., and Molycorp, Inc. Further, Claimant alleged that the Respondents traded on margin without authorization in contradiction of Claimant's investment objectives and risk tolerance. Claimant sought $99,619.91 in compensatory damages plus punitive damages, interest, attorneys' fees, and costs. In the Matter of the FINRA Arbitration Between Ronald D. Drake, Claimant, vs. Rockwell Global Capital LLC, Kevin M. Sheehan, Jr., Kenneth L. Severinsen, Anthony P. Salamone, Bruce J. Guarino, Dennis Grubelic, and Glen R. Stifelman, Respondents (FINRA Arbitration 15-01248, December 12, 2017).

Respondents Sheehan, Severinsen, and Salamone did not file executed Submission Agreements, but are bound by the FINRA Arbitration Decision.

Respondents Rockwell, Guarino, and Stifelman generally denied the allegations, asserted various affirmative defenses, and sought the expungement of the matter from their Central Registration

In June 2015, Claimant removed Grubelic as a Respondent and added Stifelman.

As set forth in the FINRA Arbitration Decision under the heading of "REPRESENTATION OF PARTIES":

  • Claimant  Drake was represented by Hilton Wiener, Esq., 
  • Respondents Rockwell and Guarino were represented by Robert M. Bursky, Esq. 
  • Respondent Stifelman was represented into July 2016 by Bursky but following the lawyer's withdrawal, Stifelman was represented by Aegis J. Frumento, Esq.

Discovery Sanctions

In January 2017,  Stifelman filed a Motion for Discovery Sanctions, which was opposed by Claimant. In October 2017, the Arbitrator reserved his ruling on Stifelman's Motion for Discovery Sanctions until the close of Claimant's case.

Emergency Motion

On or about October 23, 2017, Claimant filed an Emergency Motion to Amend the Statement of Claim ("Emergency Motion") to which Respondents Stifelman, Rockwell, and Guarino responded in opposition. As further explained in the FINRA Arbitration Decision:

[I]n Claimant's Reply to Respondent's Opposition to Emergency Motion, Claimant's counsel stated he would have to withdraw as counsel if the Emergency Motion was not granted. In his Order dated October 23, 2017, the Arbitrator deferred ruling on Claimant's Emergency Motion until the hearing on October 24, 2017, and ordered all parties to appear at the hearing and be fully prepared.

Neither Claimant nor Claimant's counsel appeared in-person at the hearing on October 24, 2017. Claimant's counsel appeared by telephone and orally requested leave to appear telephonically and to adjourn the evidentiary hearing. On the record at the hearing, the Arbitrator provided Claimant's counsel the opportunity to postpone the hearing until October 25, 2017, so counsel could travel to the location and have Claimant appear by telephone. On the record at the hearing, Claimant's counsel declined to postpone the hearing until October 25, 2017. The Arbitrator otherwise denied Claimant's Motion to Adjourn and Claimant's Emergency Motion, which had been deferred previously. On the record at the hearing, Claimant's counsel orally requested to withdraw as counsel. On the record at the hearing, the Arbitrator denied Claimant's counsel's Request to Withdraw as Counsel.

At the Hearing

At the hearing, Respondents variously moved for default judgment or dismissal, which was asserted on behalf of both the appearing and non-appearing Respondents. Further, Respondents moved for costs.

Respondents Rockwell, Guarino, and Stifelman did not pursue their requests for expungement and, as such, no determination was made on their application.


The sole FINRA Arbitrator


  • Respondent Stifelman's Motion for Discovery Sanctions (Motion to Dismiss for Lack of Cooperation with Discovery);
  • Respondents Rockwell and Guarino's Motion for Default Judgment;
  • Respondents Rockwell, Guarino, and Stifelman's Motion for a Bill of Costs


  • Respondents' Motion to Dismiss (on behalf of all Respondents).
  • Respondents Rockwell, Guarino, and Stifelman's Motion for an Award of Costs


  • Claimant Drake to pay to Respondent Rockwell and Respondent Guarino $9,075, and to Respondent Stifelman $15,757.41  in travel costs and attorneys' fees related to his non-appearance at the hearing.

As to the allocation of arbitration fees, the sole FINRA Arbitrator assessed against Claimant Drake:

  • $675 of $1,350 in postponement fees;
  • $300 of $600 in Discovery-related motion fees; and
  • $1,575 of $2,700 in hearing session fees/assessments

Bill Singer's Comment

Ouch!!! A classic case of adding insult to injury. Public customer Drake sues for just shy of $100,000 in damages but winds up with a dismissal with prejudice and a tab for $27,382 in costs and fees. Hopefully, he retained his lawyer on a contingency because if he didn't, Drake also has to factor in his legal fees. 

Compliments to the sole FINRA Arbitrator for a superb FINRA Arbitration Decision. The arbitrator provided us with sufficient content and context. 

As a lawyer who has represented both public customers and industry parties, and as someone who has served on and Chaired arbitration panels, I fully appreciate the difficult position in which Claimant placed the sole FINRA Arbitrator, Respondents, and Respondents' counsel. As I read through the arbitrator's explanation of the events leading up to the hearing date, I understand why he characterized Claimant's last-minute attempt to cancel the hearing as "contempt." Given the superb rendering by the arbitrator of his explanation for his ruling, I offer his own words:

This matter came before the Arbitrator on October 24, 2017 at 9:00 a.m. C.S.T. at the Radisson Blu Hotel in Minneapolis, Minnesota. Claimant did not appear personally, but Respondents did.

After waiting more than one hour, a phone appearance was arranged for Claimant's counsel, Hilton Weiner ("Weiner"). Claimant was not present when Weiner appeared by phone. Arguments were heard in the morning, and a lunch break was taken so that the Arbitrator could collect his thoughts and rule on the motions.

While Respondents' Motion for a Bill of Costs is denied, the Arbitrator, after hearing the arguments of the parties, deems that sanctions against Claimant are warranted. This is because Claimant and his attorney were ordered to appear at this hearing and to be prepared for a hearing.

Rule 12212(a) of the Code allows sanctions against a party for "...failure to comply with any provision in the Code, or any order of the panel or a single arbitrator authorized to act on behalf of the panel." In this case, Claimant and his counsel did not appear at the hearing prepared to present evidence.

The sanction against Claimant is that he must pay all travel costs and expenses incurred by the Respondents in attending a hearing that did not start as scheduled.

Rule 12212(c) of the Code provides, "The panel may dismiss a claim, defense or arbitration with prejudice as a sanction for material and intentional failure to comply with an order of the panel if prior warnings or sanctions have proven ineffective."

The Panel issued an Order dated October 23, 2017, which required all parties to appear at the hearing location and to be prepared to proceed. This Order served as a warning to Claimant that the arbitration was going to move forward at the hearing location in Minneapolis. Further, at the argument phase on Claimant's motions (where Claimant appeared by phone), Claimant was provided a further opportunity by the Arbitrator to make arrangements to appear in person so that the hearing could move forward as scheduled -- even if testimony started one day late. By failing to initially appear at the arbitration, and then declining to make arrangements to appear when offered an additional chance to do so, Claimant demonstrated contempt for the Order of the Arbitrator and denied Respondents a right to a hearing at the scheduled time.

Accordingly, under Rule 12212(c) of the Code, the Arbitrator dismisses this arbitration with prejudice as a sanction for Claimant's failure to comply with the Order of the Arbitrator.