December 1, 2021
There are times -- too many -- when FINRA's version of alternative dispute resolution seems little more than a cash register. What the public should expect from FINRA's version of mandatory customer arbitration is some minimal amount of disclosure replete with content and context so as to make a given case intelligible. If all the parties desire enhanced confidentiality, that's fine, but at least note that choice in an Award. In most FINRA cases, the presentation of the underlying facts raises more questions than answers, and the pronouncement of the Award often raises more doubts than explanations. See a recent FINRA public customer Award for an example.
Case In Point
In a FINRA Arbitration Statement of Claim filed in July 2019 and as amended, public customer Claimant Webb asserted conversion and pain-and-suffering in connection with what the FINRA Arbitration Award characterizes as "restricted access to funds in Claimant's accounts for a period of six months." Claimant sought $31,905.71 in compensatory damages, $215,000 in consequential damages, $1 million in damages of pain and suffering, punitive damages, costs, and fees. In the Matter of the Arbitration Between Claudine Webb, Claimant, v. Fidelity Brokerage Services LLC, Respondent (FINRA Arbitration Award 19-01960)
Respondent Fidelity generally denied the allegations and asserted affirmative defenses.
Without any explanation, the FINRA Arbitration Panel decided that:
1. Respondent is liable for and shall pay to Claimant the sum of $20,000.00 in compensatory
damages, for pain and suffering for dental problems that remained unresolved after April 9,
2018 until June 8, 2018.
2. Any and all claims for relief not specifically addressed herein, including any requests for
punitive damages, and attorneys' fees, are denied.
Bill Singer's Comment
Is this some goddamn joke??
Lemme see if I got this
For starters, you got an aggrieved Fidelity customer suing the FINRA member firm for restricting her access for six months to her funds in her accounts. Like what the hell is that about? No . . . don't bother reading the FINRA Arbitration Award because it doesn't present any further content or context beyond the mere parroting of the allegations.
Making matters worse, there is that very, very curious Award of $20,000 in compensatory damages "for pain and suffering for dental problems . . ." That's it? The Panel only rendered an award of compensatory damages for dental problems? There was no award for any wrongful denial of access? What happened to the cause of action for conversion? On top of that, why didn't the Panel make an award for punitive damages given that Respondent's conduct seems to have caused Claimant "dental problems?" Bizarrely, the arbitrators seemed to have come up with some random dollar amount and just tossed it out there with a "compensatory damages" tag. There is literally no finding that Fidelity actually did something wrong -- there's merely an award of compensatory damages.
FINRA Code of Arbitration Procedure for Customer Disputes Rule 12104: Effect of Arbitration on FINRA Regulatory Activities; Arbitrator Referral During or at Conclusion of Case
https://www.finra.org/rules-guidance/rulebooks/finra-rules/12104, provides in part that:
(e) At the conclusion of an arbitration, any arbitrator may refer to FINRA for investigation any matter or conduct that has come to the arbitrator's attention during and in connection with the arbitration, either from the record of the proceeding or from material or communications related to the arbitration, which the arbitrator has reason to believe may constitute a violation of the rules of FINRA, the federal securities laws, or other applicable rules or laws.
Why wasn't a regulatory referral made by the FINRA Arbitration Panel to FINRA given that there was a $20,000 award presumably based upon Fidelity's misconduct involving something to do with preventing a customer's access to her funds for six months AND that misconduct caused her "pain and suffering" AND it seems that there was some conversion involved?
FINRA impaneled three -- count 'em -- THREE Public Arbitrators, and this FINRA Arbitration Panel held five pre-hearing sessions from November 2019 through April 2021, and they held nine hearing sessions from November 16 through November 19, 2021. FINRA charged the following fees:
- $2,000 Initial Claim Filing Fee
- $3,025 Member Surcharge
- $6,175 Member Process Fee
- $200 Discovery-Related Motion Fee
- $600 Contested Motion for Issuance of Subpoena Fees
- $7,000 Pre-Hearing Session Fees
- $12,600 Hearing Session Fees
I mean, you know, hey, that's a nice business the folks at FINRA are runnin', dontcha think? They charged $31,600 for the above crapola of a arbitration.