On October 13, 2010, an arbitration panel of the FinancialIndustry Regulatory Authority, Inc. (“FINRA”) awarded compensatory damages of $825,000 to a broker, formerly employed by respondent Affinity Investment Services, LLC (“Affinity,” “the brokerage firm,” or “the firm”), who allegedly was fired after objecting to sales practices she believed were unlawful. Ford v. Affinity Investment Services, LLC, FINRA Arbitration No. 08-02782 (Oct. 13, 2010). The broker had sought relief for, among other things, violation of the New Jersey Conscientious Employee Protection Act, N.J.S.A. §§ 34:19-1 – 34:19-8 (“NJ CEPA”).
In Ford, Affinity reportedly fired the claimant broker in 2007 after she objected to supervisors at the brokerage firm in 2005 and 2006 about annuity sales and 401(k) transactions which she believed were unlawful.
In addition to awarding sizable compensatory damages to the broker, the Ford arbitration panel ordered Affinity to expunge, as defamatory, the firm’s statement, on the broker’s Form U-5, that the broker voluntarily quit her job. Instead, the Ford panel directed, Affinity must admit, on the broker’s Uniform Termination Notice for Securities Industry Registration, that it fired the broker without cause.
Further, the Ford arbitration panel imposed financial sanctions against Affinity in the staggering sum of $100,000 for “discovery abuse.”
The New Jersey Conscientious Employee Protection Act is one of the broadest whistleblower statutes in the country. NJ CEPA prohibits employers from retaliating against workers who disclose, object to, or refuse to participate in certain actions that the workers reasonably believe are either illegal or in violation of public policy.
If the claimant broker in Ford were bringing her arbitration proceeding today, it’s likely that the broker would seek relief under section 922 of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”), H.R. 4173. President Obama signed the Dodd-Frank Act into law on July 21, 2010.
Section 922 of the Dodd-Frank Act amends the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., by establishing a securities whistleblower bounty program. More specifically, under section 922 of Dodd-Frank, individuals who voluntarily provide “original information” about a securities law violation which results in a successful SEC judicial or administrative action with monetary sanctions of more than $1,000,000 will be financially rewarded in an amount from 10 percent to 30 percent of the monies collected in the action or related actions. Section 922 of the Dodd-Frank Act provides larger remedies and longer limitation periods than does section 806 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A.
If you are a securities industry professional who is considering bringing an employment-related arbitration against the brokerage firm which employed or employs you, and you reside in the New York City area, call Attorney David S. Rich at (212) 209-3972.