In a recent FINRA Arbitration, a public customer sued Robinhood, but then the Claimant sort of declined to climb into the ring for the first round. There are those matches where one fighter says "no mas," but they can't find the hammer to ring the bell. Some fights just end ugly.
Case In Point
In a FINRA Arbitration Statement of Claim filed in August 2020, public customer Claimant Reich (appearing pro se) asserted fraud, negligence, misrepresentations, and breach of fiduciary duty.
In the Matter of the Arbitration Between Jonathan Reich, Claimant, v. Robinhood Financial, LLC, Robinhood Securities, LLC, and Robinhood Markets, Inc., Respondents (FINRA Arbitration Award 20-02532) https://www.finra.org/sites/default/files/aao_documents/20-02532.pdf
The FINRA Arbitration Award asserts that Claimant Reich's "causes of action relate to Disney Corporation stock." Yeah, I know -- that's not much help. Be that as it may, Claimant sought damages in excess of $80,000 plus punitive damages.
Respondents Robinhood Financial, LLC, Robinhood Securities, LLC generally denied the allegations, asserted affirmative defenses, and filed a Counterclaim asserting breach of contract and seeking $5,618 in damages, attorneys' fees, costs, and expenses.
Respondent Robinhood Markets Inc. is not a member or associated person of FINRA, did not appear in the matter, and, accordingly, the FINRA Arbitration Panel made no determination with respect to the company.
In October 2021, Claimant Reich filed a Motion for Postponement, Discovery Extension and
Videoconferencing Hearing, which Respondents opposed but the sole FINRA Arbitrator granted.
In April 2022, Respondents filed a Motion to Dismiss, to which Claimant did not respond. Accordingly, the FINRA Arbitrator granted Respondents' Motion to Dismiss, and, further, Respondents withdrew their Counterclaim.
Checkin' Out But Not Payin' The Bill
The Arbitrator offered this explanation for dismissing Claimant's claims:
Claimant indicated that he will no longer participate in FINRA proceedings and will not
pay FINRA fees associated with the hearing. In addition, Claimant has failed to follow
FINRA's Code a number of times by failing to serve or respond to discovery as set forth
by Rules 12506 and 12507 of the Code, as well as by the Initial Pre-Hearing Conference
Order. Claimant moved to postpone the final hearing in order to conduct discovery six (6)
days before the final hearing. The Arbitrator determined Claimant's request for
videoconferencing hearing was untimely. Despite this, Claimant's motion was granted,
and Claimant had until January 15, 2022, to complete discovery. Having given Claimant
more time to complete discovery, Claimant still failed to do so. The Arbitrator also found
Claimant's request for subpoenas and motion for deposition untimely. Claimant also
breached FINRA Rules by filing discovery motions without contacting Respondents'
counsel prior to filing the motion. In essence, Claimant has been given wide latitude by
the Arbitrator and has failed to meet the standards of due process and fairness of the
Also, the Arbitrator assessed, in part, the following fees against Claimant (fees assessed against Respondents not set out here):
$450 postponement fee
$600 last-minute cancellation fee
$200 discovery-related motion fee
$675 in pre-hearing session fees
Bill Singer's Comment
Public customers and industry associated persons have every right to represent themselves. Some pro se representation is handled with brilliance; in other cases, well, let's just say, not so brilliantly. As to why many folks appears as a lawyer-less party, frequently, the cost of hiring a lawyer is beyond the reach of many wannabe Claimants and don't-wannabe-Respondents. Claimant Reich initiated the lawsuit against the Respondents, and he did so without a lawyer (unless Jonathan Reich was a lawyer or had legal training -- but that's not disclosed in the FINRA Arbitration Award). Also not disclosed in the Award is just what the dispute was about; all that we are told is that Claimant sued about something involving Disney stock. Whatever that something was, Claimant attached an $80,000-plus price tag to it.
At some point -- likely in March/April 2022 -- Claimant Reich chose to cease participating in the FINRA Arbitration and also expressed his unwillingness to pay any hearing fees. As to why the public customer became disenchanted with the process and costs is not stated. The sole FINRA Arbitrator asserts that Claimant failed to properly participate in Discovery despite being required to do so by FINRA Rules and a Pre-Hearing Conference Order. Having noted Reich's non-compliance, the Arbitrator apparently made some allowances, stretched some rules, and attempted to bend over backwards to accommodate the non-lawyer (or so it seems). As the saying goes: The road to Hell is paved with good intentions. As the Arbitrator saw it, Claimant failed to properly complete Discovery despite having been "given wide latitude," and at some point the wide latitude got stretched to the point of depriving Respondents of their Due Process. When things reached that troubling limit, the Arbitrator apparently decided to dismiss Reich's claims. Of course, there's still the matter of about $1,925 fees that were assessed against Claimant -- it will be interesting to see if FINRA moves to collect said assessments and if Reich ultimately pays the fees.