Source: http://www.mayalaw.com/tag/broker/
Timestamp: 2019-07-18 15:09:38
Document Index: 261705362

Matched Legal Cases: ['§ 9', '§ 10', '§ 9', '§ 10', '§ 10', '§ 10', '§ 3', '§ 9', '§ 9', '§ 78', '§ 10', '§ 3', '§ 9', '§ 15', '§ 78', '§ 13400', '§ 15', '§ 13400', '§ 78', '§ 10', '§ 3', '§ 9']

broker Archives - Maya Murphy, P.C.
Filed Under: Employment and Labor Law Tagged With: advocate, attorney, Attorneys, award, benefits, breach, bridgeport, broker, compensation, confidentiality, confirm, connecticut, contract, Darien, employee, employer, employment, employment compensation, employment law, equitable, experienced employment law attorney, Fairfield, Fairfield County, Federal Court, fire, fired, greater benefits, health benefits, interest, invest, investments, law, law firm, law office, lawyer, Lawyers, legal advice, libel, Maya Murphy, Mayalaw.com, New Canaan, new haven, New York, non-competition, non-solicitation, pension, pension benefits, privilege, rescission, retirement benefits, revocation, sarbanes-oxley, securities, securities law, security, separation agreement, severance pay, SOX, Stamford, terminated employee, termination, termination of employment, Westport
Five Things You Need to Know About CT Separation Agreements
Federal Court Found Form U-4 and FINRA Rules to Constitute a Sufficient Basis for an Arbitration Agreement Between the Parties
Lawrence R. Gilmore v. Scott T. Brandt, 2011 WL 5240421 (D. Colo. Oct. 31, 2011).
In a recent case before United States District Court for the District of Colorado, Lawrence Gilmore (“Gilmore”) filed a motion to confirm the Financial Industry Regulatory Authority (“FINRA”) arbitration award in his favor, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9. Scott Brandt (“Brandt”) responded by filing a motion to vacate the FINRA award pursuant to the FAA, 9 U.S.C. § 10. The court granted Gilmore’s motion to confirm the award, entered judgment for the award and denied Brandt’s motion to vacate the award.
The dispute underlying the FINRA arbitration began when Brandt, a representative of Lighthouse Capital Corporation, suggested that Gilmore invest $92,000 in Diversified Lending Group, Inc. (“DLG”). Gilmore made the investment, which was quickly decimated. Gilmore alleged that DLG was a Ponzi scheme and filed a Statement of Claim with FINRA. Rather than seek a stay of arbitration, Brandt contested the issue of arbitrability by appending a statement of jurisdictional objection to his FINRA Arbitration Submission Agreement and raising jurisdictional objections throughout the arbitration proceedings. FINRA appointed a panel of arbitrators to hear the matter; however, the arbitration panel did not directly address Brandt’s jurisdictional objection. In December 2010, the panel issued an arbitration award in Gilmore’s favor for compensatory damages of $106,024.68, post-judgment interest, and attorneys’ fees.
In his motion for vacatur, Brandt argued that he never entered into an arbitration agreement with Gilmore; therefore, their dispute should not have been subjected to arbitration. The district court found that Brandt had sufficiently preserved his objection to arbitrability, and that it fell to the court to decide whether the dispute was in fact arbitrable.
Because arbitration is entirely a matter of contract, a party cannot be required to arbitrate a dispute that it has not agreed to submit to arbitration. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995). When Brandt first sought to be licensed to sell securities, he executed a Uniform Application for Securities Industry Registration or Transfer (“Form U-4”), which contained a section agreeing “to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of [FINRA].” The court determined that the agreement embodied in Brandt’s Form U-4 would constitute an agreement to arbitrate the dispute with Gilmore only if FINRA rules required this dispute to be arbitrated.
FINRA Rule 12200 is a broad provision that generally applies to any customer dispute arising in connection with the business activities of a FINRA member. Specifically, FINRA Rule 12200 requires that a dispute must be arbitrated under the FINRA Code of Arbitration Procedure if: (1) arbitration is required by written agreement or requested by a customer; (2) the dispute is between a customer and a FINRA member or associated person; and (3) the dispute arises in connection with the business activities of the FINRA member or associated person. By submitting his Statement of Claim to FINRA for arbitration, Gilmore was clearly requesting arbitration of the dispute. The district court found that Gilmore was in a customer relationship with Brandt because Brandt had induced him to invest in DLG. Additionally, the district court found that Gilmore’s claims related to Brandt’s recommendation of an investment in particular securities fell within the class of disputes reasonably regulated by FINRA. Therefore, the district court determined that FINRA Rule 12200 required the dispute between Gilmore and Brandt be submitted to arbitration. Because of this result, Brandt’s U-4 Form was determined to be his agreement to submit to arbitration of the dispute.
Because the arbitration panel had jurisdiction to decide the dispute, the award decision is entitled to deference by the federal court. 9 U.S.C. § 9-11. Because Brandt provided no argument that satisfied the statutory grounds for vacatur of an arbitration award, 9 U.S.C. § 10(a), the court granted Gilmore’s motion for confirmation of the arbitration award of compensatory damages of $106,024.68, with interest, and attorneys’ fees.
Should you have any questions relating to FINRA or arbitration issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.
Filed Under: Corporate Law, Employment and Labor Law Tagged With: 9 U.S.C. § 10, 9 U.S.C. § 10(a), 9 U.S.C. § 3, 9 U.S.C. § 9, 9 U.S.C. § 9-11, arbitrability, arbitrable, Arbitration, arbitration agreement, arbitration award, Arbitration Clause, arbitrator, attorney, Attorneys, award, benefits, breach, bridgeport, broker, brokers, Colorado, compensation, compensatory damages, confirm, connecticut, contract, Darien, defamation, employee, employer, employment, employment compensation, employment law, FAA, Fairfield, Fairfield County, Federal Arbitration Act, Federal Court, Financial Industry Regulatory Authority, FINRA, FINRA award confirmation, FINRA Code of Arbitration Procedure, FINRA Rule 12200, fire, fired, Form U-4, Form U-5, Form U4, Form U5, interest, invest, investments, judicial review of arbitration decision, jurisditional challenge, law, law firm, law office, lawyer, Lawyers, legal advice, libel, Maya Murphy, Mayalaw.com, New Canaan, new haven, New York, pension, pension benefits, Ponzi scheme, privilege, retirement benefits, sarbanes-oxley, securities, securities law, security, SOX, Stamford, stay of arbitration, termination, termination of employment, The Federal Arbitration Act, Uniform Application for Securities Industry Registration or Transfer, vacating an arbitration award, vacatur, Westport
FINRA Arbitration Awards Employer Over $500,000 for Promissory Notes Accelerated by Employee’s Termination
In the Matter of the Arbitration between Claimants Morgan Stanley Smith Barney and Morgan Stanley Smith Barney FA Notes Holdings, LLC v. Respondent Robert W. Hathaway (2012 WL 2675417)
In a recent Financial Industry Regulatory Authority (FINRA) arbitration, a sole FINRA arbitrator held that an employee is liable to satisfy his indebtedness on promissory notes, including interest, to his employer upon termination of employment.
In this case, Morgan Stanley Smith Barney (“MSSB”) and Morgan Stanley Smith Barney FA Notes Holdings, LLC, alleged that Robert W. Hathaway (“Hathaway”) was in breach of two promissory notes executed while he was employed by MSSB. In its arbitration filing, MSSB claimed the principal balances due under both notes, per diem interest for both notes, and costs of collection and arbitration. This matter proceeded pursuant to Rule 13806 of the Code of Arbitration Procedure because Hathaway neither filed a Statement of Answer nor appeared at the hearing.
On or about March 8, 2008, Hathaway executed the first promissory note with MSSB for $729,560, at an interest rate of three-percent per annum, to be repaid in nine consecutive annual installments beginning on March 19, 2009. The terms of the note included an agreement to pay all costs and expenses of collection, including reasonable attorneys’ fees. On or about June 9, 2009, Hathaway executed the second promissory note for $75,257.83 at an interest rate of 2.25-percent per annum, to be repaid in eight consecutive annual installments beginning on June 9, 2010.
On or about September 19, 2011, Hathaway’s employment at MSSB ended. MSSB alleged that termination of employment triggered acceleration of the promissory notes and made a demand for immediate re-payment. Hathaway failed and refused to satisfy the indebtedness.
After considering the pleadings and the submissions, the sole arbitrator decided that Hathaway was liable for the principal balance due under each promissory note. Hathaway was also liable for per diem interest accruing from the date employment was terminated through the date of payment on each note. Finally, Hathaway was to reimburse MSSB for non-refundable portion of its initial claim filing fee. The final award to MSSB totaled $542,816.00.
Should you have any questions relating to FINRA, arbitration or employment issues generally, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County at 203-221-3100 or at JMaya@Mayalaw.com.
Filed Under: Corporate Law, Employment and Labor Law Tagged With: Arbitration, arbitration award, arbitrator, attorney, Attorneys, award, breach, bridgeport, broker, brokers, confirm, connecticut, contract, Darien, defamation, employee, employee indebtedness, employer, employment, employment law, FAA, Fairfield, Fairfield County, Federal Arbitration Act, Federal Court, Financial Industry Regulatory Authority, FINRA, fire, fired, Form U5, interst, law, law firm, law office, lawyer, Lawyers, legal advise, libel, Maya Murphy, Mayalaw.com, New Canaan, new haven, New York, privilege, promissory notes, scurities, securities law, security, Stamford, termination, termination of employment, Westport
Court confirms FINRA Arbitration Award for Employee in the amount of $150,000 with interest
This case was not handled by our firm. However, if you have any questions regarding this case or Employment and Labor Law, please contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. today. Call us at (203) 221-3100 or by email at JMaya@Mayalaw.com, to schedule a free initial consultation. Scoble v. Blaylock… Read More
Filed Under: Employment and Labor Law, Litigation Tagged With: 15 U.S.C. § 78o-3, 9 U.S.C. § 10(a), 9 U.S.C. § 3, 9 U.S.C. § 9, adjudicate actions, arbitrability, arbitrable, Arbitration, arbitration award, arbitration filings, arbitration panel, arbitrator, arbitrator exceeding authority, attorney, Attorneys, award, benefits, breach, bridgeport, broker, brokers, Codes of Arbitration Procedure, compel arbitration, compensation, confirm, connecticut, contract, contractual arbitration agreements, customer disputes, Darien, defamation, depositions, discoverable truth, employee, employer, employment, employment compensation, employment law, Exchange Act, FAA, Fairfield, Fairfield County, Federal Arbitration Act, Federal Court, financial industry, financial industry professionals, Financial Industry Regulatory Authority, FINRA, FINRA arbitration, FINRA inquiry, fire, fired, Form U-4, Form U-5, Form U4, Form U5, illegal securities practices, Industry Code, industry disputes, interest, invest, investments, law, law firm, law office, lawyer, Lawyers, legal advice, legal advise, libel, manifest disregard, Maya Murphy, Mayalaw.com, NASD, National Association fo Securities Dealers, New Canaan, new haven, New York, non-public arbitrator, pendency of arbitration, pension, pension benefits, petition, pre-arbitration discovery, pre-arbitration requests for documents or information, preliminary injunctions, privilege, productive arbitration, regulation of the finanical markets, regulator of securities firms, retirement benefits, Rule 12209, Rule 13209, Rule 13410, Rule 13506(a), Rule 13510, Rule 13604(a), Rule 13904, sanction members, sarbanes-oxley, securities, Securities and Exchange Commission, securities law, security, SOX, Stamford, termination, termination of employment, Westport, without cause
What is “FINRA” and What Does (Should) It Do?
Attorneys here at Maya Murphy frequently are called upon to represent individuals who are the subject of a FINRA inquiry, or a party to a FINRA arbitration. We routinely post to our website client alerts regarding FINRA-related decisions but it recently occurred to us that we should take a step back and issue a post about FINRA itself—what it is, what it does (or doesn’t do), and where it came from. Knowledge is power and because FINRA so pervades the financial industry to be forewarned is to be forearmed.
“FINRA” is an acronym for the “Financial Industry Regulatory Authority,” a so-called “Self Regulating Organization.” On July 30, 2007, the New York Stock Exchange and the National Association of Securities Dealers (“NASD”) combined to form FINRA. To be sure, FINRA is cloaked in official garments of the purest silk. It was established under § 15A of the Securities Exchange Act of 1934, 15 U.S.C. § 78o-3, Karsner v. Lothian, 532 F.3d 876, 879 n.1 (D.C. Cir. 2008). It is authorized to exercise comprehensive oversight over “all securities firms that do business with the public.” Sacks v. SEC, 648 F.3d 945 (9th Cir. 2011) (quoting 72 Fed. Reg. 42170 (Aug. 1, 2007)). With respect to the creation of FINRA, the NASD, itself, made it clear that the new entity was directed at “the regulation of the financial markets.” Id. “By virtue of its statutory authority, NASD wears two institutional hats: it serves as a professional association, promoting the interests of its members; and it serves as a quasi-governmental agency, with express statutory authority to adjudicate actions against members who are accused of illegal securities practices and to sanction members found to have violated the Exchange Act or Securities and Exchange Commission . . . regulations issued pursuant thereto.” NASD v. SEC, 431 F.3d 803, 804 (D.C. Cir. 2005) (citations omitted).
FINRA is a private corporation and the largest “independent” regulator of securities firms in the United States, overseeing approximately 4,800 brokerage firms, 172,000 branch offices, and 646,000 registered securities representatives. It (not necessarily by claimant choice or mere happenstance) benefits from up to 9000 arbitration filings every year. FINRA has a staff of approximately 3,000 employees and in 2009, collected revenue of $775 Million. Senior FINRA management enjoys seven-figure annual salaries.
FINRA maintains two separate but similar “Codes of Arbitration Procedure”: one for “customer disputes” and another for “industry disputes.” In drafting its Industry Code, FINRA has apparently chosen to “trim some of the fat” off of the controlling law. For example, Rule 13209 (amended December 15, 2008) states: “During an arbitration, no party may bring any suit, legal action, or proceeding against any other party that concerns or that would resolve any of the matters raised in the arbitration.” In Arnold Chase Family, LLC v. UBS AG, 2008 U.S. Dist. LEXIS 58697 (D. Conn. Aug. 4, 2008), Judge Kravitz (in analyzing the analogous FINRA “customer” Rule 12209) demonstrated remarkable restraint in reminding UBS that within the Second Circuit (which includes Connecticut and New York) since at least 1998, United States District Courts have had not only the right, but also the duty to entertain requests for preliminary injunctions during the pendency of arbitration. See Am. Express Fin. Advisors, Inc. v. Thorley, 147 F.3d 229, 231 (2d Cir. 1998). But FINRA’s arbitral disdain for the twin plinths of fundamental fairness and the opportunity to confront one’s accusers does not stop there.
The Code’s §§ 13400-13402 require that at least one “non-public arbitrator” (i.e., one who within the last five years was associated with, or registered through, a broker or a dealer) serve on every three-person arbitration panel. Given the state of the economy, in general, and the sudden appearance, disappearance, and consolidation of Wall Street firms, in particular, it is not unreasonable for a “non-public arbitrator” to have past connections or future aspirations with respect to a corporate party to the arbitration.[1] This ethical tar pit is bottomless, as evinced by Rule 13410, which vests in the “Director of FINRA Arbitration” discretion to retain an arbitrator who fails to make a required disclosure, notwithstanding a timely notice of disqualification by one of the parties. See, generally, Credit Suisse First Boston Corp. v. Grunwald, 400 F.3d 1119 (9th Cir. 2005).
FINRA also makes it clear that it will not permit its Code to let the discoverable truth get in the way of an otherwise productive arbitration. Rule 13506(a) ostensibly permits pre-arbitration requests for documents or information, provided such requests do “not require narrative answers or fact finding,” thereby rendering such requests virtually useless. Rule 13510 states outright that depositions are “strongly discouraged” and permitted “only under very limited circumstances.” The absence of meaningful pre-arbitration discovery makes the proceeding something akin to “trial by ambush.” Rule 13604(a) states: “The panel will decide what evidence to admit. The panel is not required to follow state or federal rules of evidence.” Finally, Rule 13904 permits rendition by the panel of a skeletal or elliptical award devoid of underlying factual findings or legal reasoning. Even if the parties jointly request an “explained decision” (requiring an additional $400.00 “honorarium” to the FINRA chairperson), only “general reasons” for the award are required, and inclusion of legal authorities and damage calculations is specifically not required. Under these circumstances, mere comprehension of the basis for the award, much less meaningful judicial review of the award even under the most stringent “manifest disregard” standard (assuming such standard of review still exists, see Stmicroelectronics, N.V. v. Credit Suisse Securities (USA) LLC 648 F.3d 68, 78 (2d Cir. 2011), is rendered impossible.
The take-away from this is that for financial industry professionals, FINRA rules, investigations, and arbitrations (however unsatisfying) are often the only game in town. If you find yourself trying to negotiate the FINRA minefield and need help, contact Bob Keepnews, Esq. at the Maya Murphy, P.C. office located in Westport at (203) 221-3100 or rkeepnews@mayalaw.com.
[1] In Arnold Chase Family, LLC v. UBS AG, 2008 U.S. Dist. LEXIS 58697 (D. Conn. Aug. 4, 2008), Judge Kravitz made pointed reference to both the sudden demise of Bear Stearns and the fact that securities customers do not have much say in the writing of FINRA’s rules. Id. at *8-9, *13-14.
Filed Under: Employment and Labor Law Tagged With: § 15A of the Securities Exchange Act of 1934, §§ 13400-13402, 15 U.S.C. § 78o-3, 9 U.S.C. § 10(a), 9 U.S.C. § 3, 9 U.S.C. § 9, adjudicate actions, arbitrability, arbitrable, Arbitration, arbitration award, arbitration filings, arbitration panel, arbitrator, arbitrator exceeding authority, attorney, Attorneys, award, benefits, breach, bridgeport, broker, brokers, Codes of Arbitration Procedure, compel arbitration, compensation, confirm, connecticut, contract, contractual arbitration agreements, customer disputes, Darien, defamation, depositions, discoverable truth, employee, employer, employment, employment compensation, employment law, Exchange Act, FAA, Fairfield, Fairfield County, Federal Arbitration Act, Federal Court, financial industry, financial industry professionals, Financial Industry Regulatory Authority, FINRA, FINRA arbitration, FINRA inquiry, fire, fired, Form U-4, Form U-5, Form U4, Form U5, illegal securities practices, Industry Code, industry disputes, interest, invest, investments, law, law firm, law office, lawyer, Lawyers, legal advice, libel, manifest disregard, Maya Murphy, Mayalaw.com, NASD, National Association fo Securities Dealers, New Canaan, new haven, New York, non-public arbitrator, pendency of arbitration, pension, pension benefits, pre-arbitration discovery, pre-arbitration requests for documents or information, preliminary injunctions, privilege, productive arbitration, regulation of the finanical markets, regulator of securities firms, retirement benefits, Rule 12209, Rule 13209, Rule 13410, Rule 13506(a), Rule 13510, Rule 13604(a), Rule 13904, sanction members, sarbanes-oxley, securities, Securities and Exchange Commission, securities law, security, SOX, Stamford, termination, termination of employment, timely notice of disqualification, Westport
Form U5 – Employment Termination in the Securities Industry
This case was not handled by our firm. However, if you have any questions regarding this case or Employment and Labor Law, please contact Joseph Maya and the other experienced attorneys at Maya Murphy, P.C. today. Call us at (203) 221-3100 or by email at JMaya@Mayalaw.com, to schedule a free initial consultation. Broker-dealers, investment advisors and… Read More
Filed Under: Employment and Labor Law Tagged With: adequate consideration, anti-compete, Arbitration, arbitration agreement, area, at will, attorney, Attorneys, binding, bonus, bonuses, bridgeport, broad, broker, brokers, burden of proof, burdensome, classified information, clients, commercial, commercial operations, companies, company, compensation, compete, competing, competing businesses, competing services, confidentiality agreement, conflict of interest, connecticut, Consideration, contracts, covenant not to compete, customary practices, Darien, defense, Departing employees, direct competitor, directly, Directors, Dirty U5, discrimination, duration, duress, Easton, employee, employer, employer's interest, employment, employment at will, Employment Attorneys, Employment Contract, employment law, enforceability, enforcement, excessive, executives, Fairfield, Fairfield County, FINRA, Form U5, former employer, fraud, future clients, future employment, geographic limitations, geographical, Greenwich, harassment, headquarters, hiring, human resources, improper competition, injunction, injunctive relief, invest, investment, investments, irreparable harm, job offers, job responsibilities, law firm, lawyer, Lawyers, leaving company, legal counsel, leverage, management responsibilities, manager, Maya Murphy, mediation, misrepresentations, monopoly, narrow, negotiated, negotiating severance packages, negotiation, New Canaan, new employment, New York, non-compete, non-compete covenant, non-competition, non-disparagement, non-solicitation, norwalk, obligations, occupation, offer, offer agreement, offer letter, oral representations, P.C., payroll, position, practice, previous employer, prohibitions, proprietary knowledge, protect, public interest, radius, reasonable, reasonably necessary, refuse to enforce, represent, representation, restricted area, restricting disclosures, restrictive, salaries, salary, scope, securities, Senior management, separation agreement, SEVERANCE AGREEMENTS, SEVERANCE LETTERS, severance package, similar products, solicitation, Stamford, start own business, Stratford, termination, territorial, time limitations, unreasonable provisions, vacation, valid, vesting, vesting of stock options, violation, voluntarily left, voluntary, Weston, Westport, written approval