A registered representative won a big award of monetary damages against his former employer from a majority of a three-member FINRA arbitration panel, but the only arbitrator to offer an explanation strongly disagreed with the decision to award any damages.
Claimant Liet Han: “asserted the following causes of action: wrongful termination; breach of contract; unjust enrichment and quantum meruit; severance; and defamation.” Among other things, Han requested at least $5 million in compensatory damages and expungement of his Form U5, the document in which a broker-dealer records the circumstances of a broker’s termination from association with that firm.
An Unexplained Award …
In the Award, the majority of the Panel finds J.P. Morgan liable to Han for $2.5 million and the full Panel recommends the expungement of Han’s Form U5. In particular, the Panel recommends: “The Reason for Termination shall be changed to ‘Other’ and The Termination Explanation shall be deleted in its entirety and replaced with the following language: ‘J.P. Morgan Securities LLC or its affiliate exercised its right to terminate the Registered Representative as an At-Will employee.’… The Panel further recommends the expungement of all references to Occurrence Number 1964100 from the registration records maintained by the CRD for Liet Han.” However, the Award doesn’t state that the expunged information is defamatory, as is common in Form U5 expungement Awards. The Panel also assessed $8,850 of the $11,650 in hearing fees to J.P. Morgan.
… But an Explanatory Dissent
In a lengthy dissent from the damage award, Public Arbitrator Mitchell Regenbogen fills in a number of the factual details. According to him: “the Claimant and his wife orchestrated an attempt to deposit over $15,000 in cash without complying with the requirement to make a currency transaction report (CTR) for cash transactions over $10,000, an offense that the undisputed record shows is known as unlawful financial ‘structuring,’ the first step in the serious crime of money-laundering.[] … Rather than Claimant simply going to the teller and completing the CTR, he and his wife ‘pulled back’ the cash and deposited an amount under $10,000 in order to avoid the ‘form,’ with Claimant depositing on the next business day the exact balance that was pulled back. A ‘pullback’ the undisputed record showed, is a red flag for unlawful structuring.” Moreover, he did this despite: “years of training as a registered representative and a member of the financial services industry, which training included specific and repeated admonitions against the exact behavior he and his wife engaged in….” Nonetheless, Arbitrator Regenbogen acknowledges that there was no evidence that the Claimant intended to engage in money laundering.
A Scathing Evaluation of the Claimant’s Credibility
Arbitrator Regenbogen’s assessment of the evidence presented by the Claimant is best summarized in this passage of his dissent: “I find that the only objective evaluation of the Claimant’s and his wife’s testimony compels the conclusion that they were simply untrue, and that despite the Claimant’s assertions of ignorance, absent-mindedness, self-serving excuses and denials of his own statements and trying to foist all of the blame on his wife (this coming from a sophisticated Claimant who kept reminding the Panel that he handled a $147 million book of business for Respondent), the facts speak for themselves ….”
And Some Choice Words for His Colleagues
Finally, the dissenter does not spare his fellow panelists from criticism, beginning his opinion: “The majority ignores the law and the facts, and inappropriately treats the Claimant as a victim, in order to ‘compensate’ the Claimant at the expense of Respondent for a situation that was entirely of the Claimant’s making.” He further admonishes in conclusion that the majority arbitrators: “are giving license to registered representatives to illegally structure transactions, are rendering employer and FINRA investigations meaningless, with the majority’s only requirement for doing so being offered self-serving and theatrical stories created after the fact. They are punishing the Respondent for complying with the law and rewarding the Claimant enormously for ignoring it…. Nevertheless, the majority has decided to award an unconscionable $2,500,000 to the Claimant for ‘compensation.’ One can only look incredulously at this record and ask ‘compensation for Respondent having done what’?”
