Former First Republic Securities Employee Wins $1.1 Million FINRA Arbitration Award

December 4, 2018

On Wall Street, the majority of employment disputes tend to get resolved in favor of employers. Some of that may be prompted by the Terminable-at-Will doctrine, which seems an attempt to balance employees' right to quit at their discretion by imbuing employers with the discretion to fire at will. Although the doctrine is short-circuited by the express terms of an employment contract or the rules of a union shop, the courts frequently sanction at-will discharges involving violations of constitutionally protected rights or tortious misconduct. In a recent industry employment dispute, the former employee has a laundry list of complaints against his former employer. Simply going by the averages for such cases, you sort of anticipate that the Claimant is going to go down in flames. Then you come upon the stunning finding by three independent arbitrators that the former employee's discharge was "unwarranted." You don't see that conclusion every day in a Wall Street employment dispute. In the end, it's an unmitigated victory for a former employee.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in November 2016, and as amended, associated person Claimant Christopher Herridge Rusk asserted abuse of the Uniform Termination Notice for Securities Industry Registration ("Form U5"); slander and libel; tortious interference with business relationships; breaches of contract; industry standards of commercial honor and principles of trade, and the implied covenant of good faith and fair dealing; and violation of New York Labor Law. At the close of the hearing, in addition to punitive damages, interest, costs, fees, and expenses, Claimant Rusk sought

  • at least a $153,882.69 lump-sum severance payment;
  • expungement of the language on his Form U5; and
  • an Order that 
    • his brokerage account be unfrozen;
    • his recruiting Promissory Note forgiven, and 
    • Respondent First Republic Securities turn over $50,000.00 in his brokerage account,
In the Matter of the FINRA Arbitration Between Christopher Herridge Rusk, Claimant, and First Republic Securities Company, LLC, Respondent (FINRA Arbitration 16-03411, November 21, 2018)

Respondent First Republic Securities generally denied the allegations, asserted affirmative defenses, and filed a Counterclaim asserting breach of contract and seeking $142,788.46 plus interest, costs, and attorneys' fees. 


The FINRA Arbitration Panel found that Respondent First Republic Securities' disputed disclosures were defamatory in nature and, accordingly, the arbitrators recommended the expungement of the "Reason for Termination" and the "Termination Explanation" in Claimant Rusk's Form U5 as submitted to the Central Registration Depository ("CRD"). The Panel recommended that the "Reason for Termination" be revised to indicate "Other;" and the attendant explanation state:

Christopher H. Rusk's termination was unwarranted.

In furtherance of the expungement relief, the Panel recommended conforming revisions to the Form U5 and the Disclosure Reporting Page. 


The FINRA Arbitration Panel found Respondent First Republic Securities liable and ordered it to pay to Claimant Rusk compensatory damages of $727,000.00 (wrongful termination ) and $49,194.00 (return of his brokerage account) plus 9% interest until paid. Additionally, the Panel ordered payment of $26,943.89 in costs and $256,717.50 in attorneys' fees. Finally, the Panel ordered the forgiveness of the subject Promissory Note and the issuance of the appropriate tax forms reflecting such status.

Bill Singer's Comment

Online FINRA BrokerCheck records as of December 5, 2018, disclose that Rusk had been discharged for alleged outside business activity. In disputing the original termination allegations that are the subject of this Arbitration, Rusk asserted that he was given:

[D]irection by my former supervisor and compliance officer on how to receive 401K trailers from outside companies that ended up being wrong. Instead of working with me internally to solve the problem, the company just terminated me.

Claimant Rusk won -- it would even be appropriate to say that he ate First Republic's lunch and then kicked the firm's ass. I mean, geez, he racked up just shy of $1.1 million in damages, costs, fees, and interest. And when was the last time you saw a FINRA Arbitration Panel tell an industry employer to take the alleged balance due on an Employee Forgivable Loan and shove it where the sun don't shine? 

Compliments to Claimant Rusk's legal counsel: 

Brian J. Neville, Esq. and 
Mary Grace White,Esq.,
Lax & Neville LLP