A FINRA arbitration panel recently decided in favor of a broker against his former broker-dealer in a dispute over a U4 involving an examination over advertisements for a fixed annuity product.
The decision not only resulted in a settlement for compensatory damages and legal fees, but also $575,000 in punitive damages, double the settlement amount, sending a message that alleged wrongful termination and defamation in FINRA BrokerCheck forms will not be tolerated.
The arbitration panel’s decision was a “serious signal” to the BD that it had “screwed up big-time,” says Alan Wolper of Locke LordBissell & Liddel in Chicago, the lawyer representing the broker, Scott Olson of Melbourne, Fla.
Despite Olson’s victory in the arbitration, however, he may still be facing an enforcement action from FINRA.
The B/D, World Equity Group Inc. (WEG), also had to pay legal fees totaling almost $283,000, plus FINRA filing fees. Compensatory damages awarded were $285,000.
The conflict between World Equity Group and Olson was over the advertising of insurance products, not securities, but since Olson is a registered rep, FINRA has jurisdiction over all communications to the public.
The arbitration panel found no violations of investment-related statutes, it stated.
The 2009 BrokerCheck U4 document prepared by WEG and disputed successfully alleged that Olson disregarded FINRA advertising rules and enforcement action protocol and attempted to use WEG to facilitate “ulterior agenda vis-a-vis FINRA.”