A famous criminal defense lawyer told me about the homicide case he handled in which a gun shot was heard coming from a room that had no windows and only one door. When the police opened the door, they found a victim shot dead and one man sitting in the corner holding a gun. The gunman said "I did it." The police arrested the gunman. The coroner ruled out suicide and the evidence proved that the gunman had fired the shot. At trial, the gunman offered an amazing defense that stunned the courtroom. It was the most incredible story anyone had ever heard and prompted the jury to find "not guilty." Unfortunately, that's all I was told about the case. I don't know what happened in the sealed room. I don't know what the amazing defense was. I was told, however, that the defendant offered an incredible story that won his freedom. Why did I just jerk you around with that infuriating story? Read today's BrokeAndBroker.com Blog.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2016, public customer Claimant Gordon Siu representing himself pro se sought $15,000 in damages. In the Matter of the FINRA Arbitration Between Gordon Siu , Claimant, vs. Scottrade Inc. and TD Ameritrade, Inc., Respondents (FINRA Arbitration 18-00914, August 13, 2018) http://www.finra.org/sites/default/files/aao_documents/18-00914.pdf The FINRA Arbitration Decision states that Claimant Siu sought damages pursuant to "Scottrade's alleged violation of California Civil Code section 1670.8."
Yeah, I know, there ain't much meat on the bones in the above paragraph when it comes to setting forth Claimant Siu's claims and the basis for his alleged damages. Well, there's a reason for the economy of my explanation. As set forth in the FINRA Arbitration Decision, this is essentially the sum and substance of what we are told about Siu's claims:
CASE SUMMARY: Claimant was a customer of Scottrade until its recent acquisition by TD Ameritrade. After learning about the acquisitions and that his local Scottrade office would be closing, Claimant asserted claims for misrepresentation and non-disclosures relating to the terms and conditions of Scottrade's website, which allegedly prohibit Claimant from making derogatory or disparaging statements that hyperlink to the website. Claimant also alleged that by acquiring Scottrade, TD Ameritrade assumed Scottrade's liabilities. The causes of action do not relate to any specific securities.
The sole FINRA Arbitrator denied Claimant Siu's claims.
Bill Singer's Comment
Seriously, does FINRA have any quality control when it comes to someone, anyone, merely reading the crap that gets publicly posted?
Does anyone at FINRA care whether their various decisions, settlements, notices, etc. make sense or are coherent?
Working our way through what FINRA published in terms of a final decision in public-customer Siu's arbitration against Respondent Scottrade and Respondent TD Ameritrade, we immediately come upon some unusual omissions. For starters, there is no statement as to whether either of the two respondents denied any of Claimant Siu's allegations. Such a denial is usually set out in likely 99% of the published FINRA Arbitration Decisions. Similarly, there is no statement as to whether either of the respondents asserted any affirmative defense. Again, that's disclosed in the overwhelming majority of FINRA Arbitration Decisions. If neither respondent denied Siu's allegations and neither asserted any defenses, on what basis did the arbitrator rule against the public customer? There is no explanation.
As to the substance of Siu's allegations, I get the part they did "not relate to any specific securities." It's the part about what the public customer's allegations relate to that I'm having difficulty figuring out. For those of you who want to play along at home, please read the FINRA Arbitration Decision and see if you can follow along. Let's parse out the few facts presented to us in the published decision:
Siu was a customer of Scottrade.
Scottrade was acquired by TD Ameritrade.
Siu asserted "claims for misrepresentation and non-disclosures relating to the terms and conditions of Scottrade's website, which allegedly prohibit Claimant from making derogatory or disparaging statements that hyperlink to the website."
Siu's $15,000 in monetary damages are tied to "Scottrade's alleged violation of California Civil Code section 1670.8."
FINRA's Office of Dispute Resolution deferred Siu's payment of the $425 Claim Filing Fee.
The sole FINRA Arbitrator waived Siu's payment of the $425 Claim Filing Fee.
Now let's see if we can come up with some answers by reading the Decision -- and no cheating! You don't get to make inferences. You don't get to make implications. You need to find the answers in the Decision (which is where they should be to begin with).
What were the misrepresentations/non-disclosures raised by Siu concerning the terms and conditions of Scottrade's website?
What was the language on Scottrade's website that Siu cited as allegedly prohibiting him from making derogatory or disparaging statements?
Did Siu make any derogatory/disparaging statement that hyperlinked to the website?
What was the basis for Siu's calcuation of $15,000 in damages?
What is the purpose of California Civil Code section 1670.8?
What did Siu alleged that respondents had done to violate California Civil Code section 1670.8?
Why did FINRA's Office of Dispute Resolution defer Siu's payment of the $425 Claim Filing Fee?
Why did the sole FINRA Arbitrator waive Siu's payment of the $425 Claim Filing Fee.?
Among the irksome aspects of the Siu Decision are all the anomalies that don't get explained. Why no indication of the absence of a reference to respondents' assertion of any denials or defenses? Why no explanation as to the unusual double-barreled waiver by FINRA and an Arbitrator of the filing fee in a case where the public customer had all his claims denied? There is no explanation.
Additionally, since this entire case appears to revolve around language stated by a public customer and language on a broker-dealer's website, why isn't any of that language cited? There is no explanation.
Finally, we have no explanation as to the nature of California Civil Code section 1670.8, upon which the claim for damages appears to solely rest! Even a modest amount of quality control from FINRA should have elicited the name of the Title/Section at issue or some brief synopsis of its parameters. Here's what I found:
California Civil Code Title 4. UNLAWFUL CONTRACTS, Section1670.08 [effective January 1, 2015]:
(a) (1) A contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer's right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.
(2) It shall be unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.
(b) Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.
(c) Any person who violates this section shall be subject to a civil penalty not to exceed two thousand five hundred dollars ($2,500) for the first violation, and five thousand dollars ($5,000) for the second and for each subsequent violation, to be assessed and collected in a civil action brought by the consumer, by the Attorney General, or by the district attorney or city attorney of the county or city in which the violation occurred. When collected, the civil penalty shall be payable, as appropriate, to the consumer or to the general fund of whichever governmental entity brought the action to assess the civil penalty.
(d) In addition, for a willful, intentional, or reckless violation of this section, a consumer or public prosecutor may recover a civil penalty not to exceed ten thousand dollars ($10,000).
(e) The penalty provided by this section is not an exclusive remedy, and does not affect any other relief or remedy provided by law. This section shall not be construed to prohibit or limit a person or business that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove.
Gee, now that we've read the actual code section, it seems that Siu may have -- and I stress may have -- sued Scottrade because that firm's website may have contained language that Siu thought may have violated the State of California's law against contracts or proposed contract for services that include a provision waiving the consumer's right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services, and any threat to seek to enforce such a provision or to otherwise penalize a consumer making a protected statement. If such was Siu's theory and the basis of his claims, it would have been nice for that to have been more clearly expressed in the Decision.There is no explanation.
Assuming that my inferences and assumptions are correct, then I'm guessing Siu's $15,000 claim was premised upon Section 1670.8(c)'s civil penalty of a $2,500 cap for the first instance of violation and a$5,000 cap for each additional instance; and, perhaps, Section 1670.8 (d)'s $10,000 penalty for "willful, intentional, or reckless violation ." My musings don't matter much because the Arbitrator dismissed Siu's claims. Unfortunately, I have no idea what the underlying facts were, why the failed to satisfy the burden of truth, and why the Arbitrator ruled against Siu. Not even remotely suggesting that the Decision before us was wrong. For all I know, the Arbitrator may have been dead on. Unfortunately, that's not the state of mind that I should have after reading a FINRA Arbitration Decision.
Did the Arbitrator rule against Siu because there was no Section 1670.8 prohibited language on Scottrade's website? There is no explanation.
Did the Arbitrator rule against Siu because even though Section 1670.8 prohibited language existed on Scottrade's website, Siu failed to prove or the respondents successfully explained, or, like, what? There is no explanation.