Magical Mystery Tour Of A FINRA Arbitration Expungement Award

November 22, 2022

I like a good mystery. I just don't like a mystery in the form of a FINRA Arbitration Award. As I see it, a public, published, FINRA Arbitration Award owes the litigants some clarity as to what was found by the arbitrators and how they calculated the awarded damages, fees, and costs. Frankly, that's not asking much. Unfortunately, when you read many FINRA Arbitration Awards, things often don't add up. In a recent Award, it's almost impossible to understand what did or didn't happen and how the arbitrators calculated the final award of damages. In the end, we're taken a magical mystery tour to nowhere, and have no idea how we got there. 

Case In Point

In a FINRA Arbitration Statement of Claim filed in July 2020, associated person Claimant Perry asserted that Respondent J.P. Morgan ("JPM") had filed a defamatory Form U5. Claimant Perry sought an expungement of the U5 and related Form U4, not less than $300,00 in compensatory damages, punitive damages, interest, and fees. 
In the Matter of the Arbitration Between Trevor Michael Perry, Claimant, v. J.P. Morgan Institutional Investments Inc.,  Respondent  (FINRA Arbitration Award 20-02447)

Respondent JPM generally denied the allegations, asserted affirmative defenses and filed a Counterclaim asserting unjust enrichment -- the FINRA Arbitration Award asserts in part that:

[R]espondent alleged that Claimant charged personal expenses to his corporate credit card, which were unauthorized and, as a result, Claimant's employment was terminated, and Claimant failed to reimburse Respondent for those charges.

At the hearing, Respondent/Counter-Claimant JPM sought $172,411.24 in damages plus interest. Perry generally denied the Counterclaim and asserted affirmative defenses.


The Panel found that the Form U5 had disclosed information about Claimant that was defamatory in nature; and, according. the arbitrators recommended the expungement of the Form U5 via 

The termination was non-securities related. Registered representative's employment was terminated after he charged more than $159,000.00 of personal expenses on a corporate credit card of the firm and did not repay the bulk of the charges in full after demand for payment. Charging the corporate credit card for personal expenses was permitted by the investment firm even though it was in violation of written company policy.

Also, the Panel found Claimant Perry liable to and ordered him to pay to Respondent JPM $172,411.24 in compensatory damages plus interest.

Bill Singer's Comment

According to online FINRA BrokerCheck disclosures as of November 22, 2022, Perry was first registered in 2007 and but for the Termination disclosure at issue, his industry record has been spotless for some 15 years. 

Claimant Perry won a valuable finding that he had been defamed. Unfortunately the Panel's revision is something akin to damning with faint praise. Truly, I have no idea how or why Perry was defamed because there is no explanation in the Award that sets out the key defamatory statements made by JPM. 

The Award recommended that JPM's version of events now denote that whatever Perry did, it was "non-securities related." That's a valuable clarification -- so Claimant at least got that satisfaction.  On the other hand, what the hell does this proposed revision mean: "Charging the corporate credit card for personal expenses was permitted by the investment firm even though it was in violation of written company policy?" What??? How do the words "permitted" and "violation" get written into that same sentence?  Sort of like, Mr. Smith was permitted to make a right turn at the red light but when he turned right at the red light it was a traffic violation. Yeah, sure, that makes sense -- like nowhere, unless, of course, we're on a magical mystery tour.

Finally, I have no idea how the Panel went from $159,272.43 in cited charges to a $172,411.24 Award. The Panel seems to have found that Perry was terminated for charging $159,000 in personal expenses on a corporate credit card and, thereafter, not repaying the "bulk" of the challenged personal expenses. Not repaying the bulk of a debt means that some of the debt was repaid albeit not the majority. Would have been nice for the Award to have explained why Perry failed to repay the balance -- and what that balance was. Now, mind you, there may well be a very simple explanation as to that roughly $13,000 increase from the roughly $159,000 in charges to the roughly $172,000 Award. -- which was, to the penny, what JPM has asked for. So, it doesn't seem like the FINRA Arbitrators pulled the higher number out of thin air. Regardless, just some brief explanation, albeit one sentence, would have helped here.