It's one of the most common questions asked of industry lawyers when approached by an angry former employee looking to sue the former employer firm: Can I win? Hand in hand with such a preliminary query are the questions of how much is my case worth and is there anything you can do about that crap they posted on my Form U5? A recent FINRA Arbitration answers some of those nagging questions. Whether or not the answers are satisfactory depends on a number of factors.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2016 and as amended thereafter, Claimant Clark asserted defamation in connection with allegedly false and defamatory statements filed on his Form U5. Claimant sought $3 million in compensatory, punitive, and exemplary damages. Further, Claimant sought the expungement of the cited language from his Form U5. At the times relevant to this arbitration,, Claimant Clark was employed by BOSC, Inc. but that firm purportedly changed its name to BOK Financial Securities, Inc. In the Matter of the FINRA Arbitration Between Christopher Rolfe Clark, Claimant, vs. BOK Financial Corporation, BOKF N.A.; BOK Financial Securities, Inc.; and BOSC, Inc.;, Respondents (FINRA Arbitration 16-02352, March 12, 2018).
Respondent BOK Financial Securities f/k/a BOSC generally denied the allegations and asserted various affirmative defenses.
Respondents BOK Financial Corporation and BOKF N.A. are not members or associated persons of FINRA and did not voluntarily submit to arbitration. Accordingly, the FINRA Arbitration Panel made no determination with respect to those two respondents.
The FINRA Arbitration Panel found Respondent BOKFS f/k/a BOSC liable to and it to pay to Claimant Clark $300,000.00 in compensatory damages at 5% interest from August 17, 2015, until paid in full. Respondent shall also pay to Claimant a $600 fee reimbursement.
The Panel assessed in part the following fees:
against Claimant: $1,400 postponent fee; $125 contested motion for issuance of subpoenas fee; and $2,325 in hearing sessions fees
against Respondent: $3,025 member surcharge; $6,175 member process fee; $125 contested motion for issuance of subpoenas fee; and $14,925 in hearing sessions fees.
In addressing Claimant Clark's expungement request, the FINRA Arbitration Panel found that the disclosure was defamatory. Although the Panel left the CRD "Reason for Termination" unchanged, the arbitrators recommended that the CRD "Termination Explanation" be replaced with the following disclosure
Difference in investment philosophy
Download a PDF copy of Bill Singer Esq's analysis of FINRA's Expungement Rules
- FINRA Rule 2080: Obtaining Customer Dispute Expungement
- FINRA Rule 2081: Prohibited Conditions Relating to Expungement of Customer Dispute
- FINRA Rules 12805 and 13805: Expunging Customer-Dispute Information Under Rule 2080