FINRA Arbitrators Hit Citigroup With $1.4 Million Damages For Discrimination, Harassment, and Retaliation

June 28, 2022

A FINRA Panel of Arbitrators found Citigroup Global Markets, Inc. ("CGMI"), Citigroup, Inc., and Citibank, N.A. guilty of discrimination, harassment, hostile work environment, and retaliation. All of which cost the Respondents $1.4 million in damages and attorney's fees. What's Wall Street's leading self-regulatory-organization, FINRA, going to do about those horrific arbitration findings? If past is prologue -- NOTHING. Actually, that's not entirely correct . . . FINRA's lackluster Board of Governors will likely create task forces and call for summits and hold conferences and develop an exam and propose to implement some initiative that will likely never quite get off the ground but, hey, the whole point is giving the appearance of action rather than actually acting, right? Why fix anything when you can just issue a press release!

Case in Point

In a FINRA Arbitration Statement of Claim filed in April 2021 and as amended, associated person Claimant Daly asserted discrimination based on gender under New York State Human Rights Law; harassment and hostile work environment; retaliation; retaliation under Title VII of the Civil Rights Act of 1964; violation of whistleblower protection under Dodd-Frank; violation of the Federal Equal Pay Act; and blacklisting/tortious interference with a prospective employment relationship.
In the Matter of the Arbitration Between Erin Ann Daly, Claimant, v. Citigroup Global Markets, Inc, Citigroup Inc., and Citibank, N.A, Respondents (FINRA Arbitration Award 21-00912)

In her FINRA Arbitration Statement of Claim, Daly sought a:

declaratory judgement declaring that the acts complained of violate the rights of the Claimant as guaranteed under the applicable Federal Law; granting equitable relief directing Respondents to cease and desist from exposing Claimant to discrimination and retaliation, including full expungement of Claimant's Form U5; directing Respondent to reimburse Claimant for any and all earnings, including bonus payments, back pay, double back pay, contractual damages, and pension benefits; compensatory damages for mental anguish, loss of dignity, humiliation, and injury to livelihood in an amount that is fair, just, and reasonable, to be determined at the hearing, including reasonable attorneys' fees, as provided under applicable law; double back pay for intentional retaliation of Claimant; front pay; contract damages; punitive damages; pre-judgement interest, costs, and attorneys' fees; and such and other relief as the Panel may deem just and proper.

Respondents generally denied the allegations and asserted affirmative defenses.

Citigroup's Motion to Dismiss

Claimant Daly's claims for Title VII retaliation, Dodd-Frank whistleblower protection, and prospective employment relationship torts did not proceed to an evidentiary hearing:

[O]n April 7, 2022, Respondents filed Motions to Dismiss citing FINRA Code of Arbitration Procedure for Industry Disputes Rule 13511: Discovery Sanctions and  Rule 13212: Sanctions. As explained in the FINRA Award:

On April 20, 2022, the Panel partially granted Respondents' Motion to Dismiss and dismissed Claimant's claims regarding retaliation under Title VII of the Civil Rights Act of 1964; violation of whistleblower protection under Dodd-Frank; and blacklisting/ tortious intereference [sic] with a prospective employment relationship. Accordingly, the hearings proceeded with respect to the remaining claims. During the evidentiary hearing on May 3, 2022, the Panel imposed a $200.00 sanction against Claimant, and in favor of Respondents, because after all discovery had been completed, Claimant sought to introduce additional documents into evidence that she failed to timely turn over to Respondent which required the Panel to conduct an in camera inspection resulting in an unnecessary executive session to resolve.


The FINRA Arbitration Panel found Respondents jointly/severally liable to and ordered them to pay to Claimant Daly $1,400,845.08 in compensatory damages for, in part, various federal and New York State Civil Rights and plus interest Human Rights laws. Additionally the Panel ordered Respondents to pay to Claimant $42,000 in attorneys' fee pursuant to New York State Human Rights Law.

Bill Singer's Comment

Three FINRA Public Arbitrators were so troubled by the Respondents' conduct that they awarded to Claimant Daly over $1.4 million in damages and attorney's fees. Just in case you may wonder as to the exact nature of the Respondents' transgressions, here is what the FINRA Arbitrators cited as the basis for their award of damages:

pursuant to the Panel's findings that Respondents violated the following statutes and rules: Discrimination-Title VII of the Civil Rights Act of 1964 and New York State Human Rights Law, Executive Law 290 et seq.; Harassment and Hostile Work Environment-New York State Human Rights Law, Executive Law 290 et seq, New York City Administrative Code, Section 807; Citi's Code of Conduct; Retaliation-New York State Human Rights Law, Executive Law 290 et seq.; and New York State Labor Law, Section 215.

Where the hell is the FINRA Arbitration Panel's referral to FINRA's regulatory arm? 

Why didn't the FINRA Arbitration Panel avail itself of FINRA Code of Arbitration Procedure for Industry Disputes Rule 13104: Effect of Arbitration on FINRA Regulatory Activities; Arbitrator Referral During or at Conclusion of Case, which 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.

By way of a brief refresher course for the FINRA Arbitrators, FINRA Dispute Resolution Services, and FINRA: 

FINRA Rule 2010. Standards of Commercial Honor and Principles of Trade

A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.

Why is there no Rule 13104 referral to FINRA for investigation if three arbitrators found that Respondent Citigroup had engaged in $1.4 million worth of compensable damages? 

Do the arbitrators think that $1.4 million worth of civil and human rights violations by a FINRA member firm somehow doesn't quite tick off the box about a member's failure to observe "high standards of commercial honor?" 

Do the arbitrators think that Citigroup's misconduct didn't quite rise to the level of being inconsistent with "just and equitable principles of trade?" 

For those of you who would like to play along at home: Do some online research and cite the regulatory cases brought by FINRA against any of its Large Member Firms (or any firm, for the matter) involving findings of harassment and/or discrimination. Knock yourself out. Look for charges involving sexism, racism, ageism -- you name it, you find it. Don't get too frustrated by the lack of search findings. It's not you. It's not Google. It's FINRA.

As I've often argued and will take this opportunity to do so yet again, FINRA's Board of Governors is a lackluster conglomeration. When it comes to harassment/discrimination, the FINRA Board has a talent for funding useless studies and conducting insipid conferences -- and then trying to puff all that nonsense into the appearance of action. In the end, we get the old stall in the form of Regulatory Notices and requests for comments and installation of panels and revised rules and more notices and, well, you know how the politics of regulations works, right? 

Over a year ago, FINRA published "FINRA Seeks Comment on Supporting Diversity and Inclusion in the Broker-Dealer Industry / Comment Period Expires: June 28, 2021" (FINRA Regulatory Notice 21-17/ April 29, 2021) 
Rather than take any meaningful action, FINRA thinks that we're all idiots and truly believes that we need to be placated, to be assured, to be reassured -- I mean, seriously, look at what the self-regulatory-organization sets out under "Background & Discussion" in Regulatory Notice 21-17 [Ed: footnotes omitted]:

FINRA's oversight of the broker-dealer industry is based on and limited by its statutory mandate and authority, which focus on investor protection and market integrity. Agencies such as the U.S. Equal Employment Opportunity Commission and its state and local counterparts are focused directly on discrimination issues in the workplace. Nevertheless, other regulatory organizations like FINRA have an opportunity to evaluate and understand whether their rules and regulatory actions have unintended disparate impacts on those within the industries they regulate. 

Many broker-dealer industry participants have developed initiatives and programs to foster greater diversity, inclusion and equal opportunity in the industry, as well as expand opportunities for historically underserved businesses and investors. FINRA supports these efforts and has been engaging with its advisory committees, industry associations and other industry members to explore how it can further facilitate those goals within the subset of the financial services industry regulated by FINRA-the broker-dealer industry. Additionally, FINRA has undertaken a number of initiatives, including: 

  • establishing an internal Racial Justice Task Force, whose efforts include identifying opportunities to encourage greater diversity and inclusion within the broker-dealer industry, with the goal of better engaging traditionally underinvested communities and representing the needs of all investors; 

  • hosting an Annual Diversity Summit since 2013, where FINRA provides a forum for diversity practitioners and business leaders in the broker-dealer industry to share ideas and effective practices to promote inclusion in the workplace; 

  • creating diversity-focused programming at the FINRA Annual Conference since 2010, where FINRA's CEO hosts top keynote speakers and industry panelists to discuss perspectives and insights on the importance of ensuring that diversity and inclusion remain a key commitment within firms in the broker-dealer industry;

  • developing the Securities Industry Essentials® (SIE®) Exam to expand who is eligible to take a qualification examination and to enable prospective broker-dealer industry professionals to demonstrate to potential employers a basic level of securities industry knowledge prior to a job application, including concepts fundamental to working in the industry (e.g., types of products and their risks); the structure of the securities industry markets, regulatory agencies and their functions; and prohibited practices. Individuals taking the SIE do not need to be associated with a FINRA member firm and a passing result on the SIE is valid for four years. This approach allows for more flexibility and career mobility within the broker-dealer industry. In promoting the SIE, FINRA has particularly emphasized outreach to historically Black colleges and universities and other minority-serving and diversity-focused organizations to expand the pool of candidates and registered persons; and 

  • proposing to implement the recommendations of the Securities Industry/Regulatory Council on Continuing Education regarding enhancements to the continuing education program for broker-dealer industry professionals. These enhancements include enabling individuals who terminate their registrations to maintain their qualification by completing continuing education, in order to allow individuals to better manage significant life events, such as professional changes and development (e.g., pursuing educational goals, a career change to a role in the firm that is not part of the broker-dealer, working overseas for an extended period due to a career change or an attempt at a different career path) or personal life events (e.g., birth or adoption of a child, unexpected loss in the family or relocation due to family needs).

The FINRA Board has expressed its support for FINRA's initiatives to promote greater diversity and inclusion and to better engage traditionally underinvested communities to serve the needs of all investors. 

FINRA staff's preliminary conversations with some industry participants have suggested the potential that aspects of FINRA's rules, operations and administrative processes may unintentionally impede diversity and inclusion (e.g., certain background data that must be provided by applicants for securities industry registration). FINRA requests comment to ensure that FINRA's rules, operations and administrative processes do not create unintended barriers to greater diversity and inclusion in the broker-dealer industry or have unintended disparate impacts on those within the industry.

What utter, unadulterated garbage! Task Force. Summit. Annual Conference. Developing an exam. Proposing to implement --- ah yes, the ever-infamous "proposing to implement"! 

Yet again, it's long past time to clean house at FINRA's Board and to seat Governors who will do the job that needs to be done!

You think I'm raising something new?  You think that FINRA has had a commendable history of rooting out Wall Street's culture of racism and sexism? Think again. For example, read: