D.A Davidson Wins Unjust Enrichment Arbitration Against Ghost of Christmas Present Former Employee

December 14, 2023

With the holiday season upon us, FINRA published an Arbitration Award in which a former employer tries to claw back all sorts of funds and property from a former employee. Bah humbug -- at first impression; however, as we delve deeper into this Christmas story, we find the Respondent employee channeling a Ghost of Christmas Past or Present or Future or, well, just ghosting. Perhaps a beleaguered Jacob Marley or a reformed Ebenezer Scrooge will step in and bring holiday cheer to one and all?

Case in Point

In a FINRA Arbitration Statement of Claim filed in May 2023, FINRA member firm D. A. Davidson & Co. alleged against its former associated person Respondent Arvoy breach of contract-promissory note; unjust enrichment-duplicate bonus payment; breach of contract-company property; and conversion-company property. In the Matter of the Arbitration Between D.A. Davidson & Co., Claimant, v. Kevin Michael Arvoy, Respondent (FINRA Arbitration Award 23-01475)
https://www.finra.org/sites/default/files/aao_documents/23-01475.pdf

Ghosting

Respondent Arvoy did not file an Answer or execute and Submission Agreement. When you consider the damages sought by Claimant, you sort of intuit why Respondent has somewhat vanished:

[R]epayment of the outstanding principal balance on the promissory note in the amount of $154,166.74, together with all accrued interest through the date of the award and post-judgment interest through the date of payment, plus attorneys’ fees and costs; repayment of the $150,000.00 Duplicate Bonus Payment; that Respondent return the laptop, or in the alternative, unspecified damages for wrongful taking and retention of the laptop; attorneys’ fees and costs, including expert witness fees; assessing all filing fees and hearing costs against Respondent; and for such other, further, or different relief as deemed just and proper.

At the hearing, Claimant withdrew its claim for return of the laptop, and instead asked for the sum of $2,000.00 to be included as part of its compensatory damages.

Award

The FINRA Arbitration Panel determined that Respondent Arvoy had been duly served with notice of the claims and the scheduled hearing but failed to respond -- notably, Respondent did not appear at the hearing. Accordingly, the Panel render the following:

1. Respondent is liable for and shall pay to Clamant the sum of $152,000.00 in compensatory damages.

2. Respondent is liable for and shall pay to Claimant the sum of $156,105.22, together with accrued interest at the rate of $5.91 per day from November 30, 2023, through date of the award.

3. Respondent is liable for and shall pay to Claimant interest on the sum of $308,105.22 at the rate of 9% per annum, from date of award until the award is paid in full.

4. Respondent is liable for and shall pay to Claimant the sum of $4,547.50 in attorneys’ fees pursuant to contract provisions in the Promissory Note and Pledge Agreement dated February 1, 2022 (paragraph 7 and 21), Signing Bonus Agreement (paragraph 3) and Confidentiality Agreement (paragraph 12).

5. Respondent is liable for and shall pay to Claimant $1,000.00 as reimbursement to Claimant for the non-refundable filing fee previously paid to FINRA Dispute Resolution Services.

6. Any and all claims for relief not specifically addressed herein are denied.

Bill Singer's Comment

Being an inquisitive fellow, I looked up Respondent Arvoy's FINRA BrokerCheck and discovered that he was first registered in 2012 to October 2017 with RBC Capital Markets; then with Raymond James from 2019 to August 2021; and, thereafter, employed at D. A. Davidson from February 2022 to January 2023. As of December 14, 2023, BrokerCheck asserts that Arvoy is "not currently registered." Beyond those three registrations and two periods of apparent unemployment, there are no disclosures on Arvoy's industry record. It's pretty much a clean slate.

So . . . what the hell is going on here? We can find some background in

DA Davidson adds to Equity Capital Markets practice (Private Equity Wire / February 7, 2022) https://www.privateequitywire.co.uk/da-davidson-adds-equity-capital-markets-practice/, which reported las year that DA Davidson had "appointed Kevin Arvoy as a director in the firm's Equity Capital Markets group." Purportedly, Arvoy was to be "responsible for expanding the firm’s origination and execution efforts of public offering transactions across all industries of focus." Other than gaining some additional context to Arvoy's role at DA Davidson, we're still pretty much in the dark as to what prompted the employee's departure.

As to unanswered questions, I would love to know what constituted thd "Duplicate Bonus Payment." Duplicate as in a mistake made by Davidson in double-paying a bonus? Then there's that laptop thing. Must have been a nice computer given that the liquidated damages sought was $2,000.

Although the arbitration aspect of this litigation is concluded, it's likely that Claimant Davidson will seek a court confirmation of the FINRA Award, which may produce an enforceable Order. Of course, should Davidson file a Motion to Confirm, Arvoy might contest that relief and/or file his own Motion to Vacate. Or Arvoy might simply ghost that follow-on court proceeding too. Regardless of what Arvoy subsequently does or doesn't do, FINRA Rule 9554: Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution provides the basis for FINRA to suspend/terminate a registered representative's registration for failure to comply with the Award. Beyond a mere loss of an arbitration, an ongoing failure to pay a FINRA Arbitration Award could prove to be a career killer.

Given the holiday season that is upon us, Arvoy may be channeling a Ghost of Christmas Past or Present or Future. Be that as it may, at some point he may find himself in the role of a beleaguered Jacob Marley or a reformed Ebenezer Scrooge. Only time will tell.