[T]he causes of action relate to Claimant's allegation that Respondent wrongfully raided Claimant, resulting in the abrupt resignation of all four of Claimant's registered representatives. Claimant further alleges that because of Respondent's raid and subsequent interference with its clients, it was forced to cease virtually all its business operations.
PURSUANT TO FINRA RULE 9553, GROWTH CAPITAL SERVICES, INC.'S MEMBERSHIP WITH FINRA IS CANCELED AS OF MARCH 14, 2022 FOR FAILURE TO PAY UNPAID DUES, FEES, AND OTHER CHARGES.
At all material times, petitioner Brian Dunn was the CEO and sole shareholder of nonparty Growth Capital Services, Inc., which helped raise capital for clients "seeking to make impact investments" (Petition ¶ 4). In December 2020, respondent Intellivest Securities, Inc., which ran a similar business, initiated an arbitration before the Financial Industry Regulatory Authority against Growth Capital. In the FINRA arbitration, Intellivest broadly alleged that Growth Capital had "raided" its operations, including inducing Intellivest employees to move to Growth Capital, encouraging Intellivest clients to breach investment agreements, and misappropriating Intellivest proprietary information. In January 2022, the FINRA arbitration panel issued an award in favor of Intellivest and against Growth Capital in the amount of $908,929.50 (id. ¶¶ 4-5).Growth Capital never paid the award. In May 2022, it filed a petition for Chapter 7 Bankruptcy in this district. See In re Growth Capital Servs., Inc., No. 22-30218. In its schedules, Growth Capital listed Intellivest as an unsecured creditor for the arbitration award.
[D]unn's sole argument is that FINRA does not have jurisdiction over him because he is no longer a FINRA member and has not been since March 2022. Dunn contends that, because Intellivest's claims in the second arbitration proceeding are contingent upon his failure to pay the award against Growth Capital in the first, the claims arose after he was a member. . . .
At oral argument, counsel for Mr. Dunn insisted over and over again that Intellivest's statement of claims in the arbitration was dependent upon the nonpayment of the award against Growth Capital and, therefore, was dependent upon circumstances that arose after Mr. Dunn's FINRA membership. Counsel specifically focused on paragraph 53 of Intellivest's statement of claims, which states:
Dunn failed to fulfill his contractual, member, and fiduciary duties to Intellivest by arranging for payment of the Award, but instead decided to simply terminate Growth Capital and release its valuable contracts, apparently out of indifference or spite to the rights and interests of Intellivest. Intellivest thus has no choice but to bring this action against Dunn in his personal capacity (Exh. F-a).
This paragraph, however, is not a necessary element of the claims of relief that follow. Claim I, for example, is for "raiding" and has nothing to do with Dunn's later failure to pay the arbitration award. So the argument by counsel for Mr. Dunn is unfounded. The same is true for the remaining claims for relief. Moreover, even if the statement of claims could be deemed to be entirely contingent upon Mr. Dunn's failure to pay, that failure arises out of the same "business activities" as those leading to the first arbitration because the award arose out of those activities.Counsel for Mr. Dunn also repeatedly made the point at oral argument that Intellivest had already obtained an award against Growth Capital, and therefore there was no occasion for another proceeding, this time against him. This argument is incorrect. When a claimant obtains a judgment against a defendant in one proceeding, the same claimant may sue a different defendant for the same transaction and occurrence, so long as any recovery in the first suit is deducted from any recovery in the second suit. Counsel for Mr. Dunn has not provided any precedent to the contrary.Counsel for Mr. Dunn further stated that all he was asking for was a restraining order preserving the status quo until these various issues could be sorted out. This sounds reassuring in its simplicity, but in truth, it violates the standards for provisional relief. It is quite clear that this dispute must be arbitrated. There is no call for a TRO or preliminary injunction.In sum, Dunn has failed to offer legal arguments or evidence that raise "serious questions going to the merits." Cottrell, 632 F.3d at 1135 (9th Cir. 2010). The evidence instead shows that he is bound to arbitrate. His application for provisional relief is accordingly DENIED.
PRESIDENT, CEO, CHIEF FINANCIAL OFFICER (CFO), SOLE SHAREHOLDER, CHIEF COMPLIANCE OFFICER