In March 2016, Raymond James & Associates, Inc. (“Raymond James”) moved to vacate a Financial Industry Regulatory Authority (“FINRA”) panel’s (the “Panel”) Award, delivered on February 2, 2016 (the “Award”), which awarded Mark Immel (“Mr. Immel”), a financial advisor formerly employed at Raymond James, $450,000 in compensatory damages.
In the underlying arbitration, and pursuant to the Award, Mr. Immel asserted the following causes of action against Raymond James in his Statement of Claim, filed on November 4, 2014: unjust enrichment; intentional interference with business relationships; and expungement. Mr. Immel alleged that after his involuntary termination, which occurred in February of 2014, Raymond James retained Mr. Immel’s book of business and failed to compensate him. At the close of the arbitration hearing, Mr. Immel sought compensatory damages in the amount of $2,206,000, in addition to expungement of his record maintained by the Central Registration Depository (“CRD”).
On January 27, 2015, Raymond James filed its Statement of Answer and Counterclaims, alleging the following cause of action against Mr. Immel: breach of contract of implied covenant of good faith and fair dealing. This allegation related to Mr. Immel’s alleged failure to repay a balance due on his promissory notes with Raymond James, which Raymond James alleges became due upon Mr. Immel’s termination. On February 12, 2015, Mr. Immel filed an Answer to Counterclaim, arguing that Raymond James should be prevented from making any counterclaims relating to those promissory notes. At the close of the arbitration hearing, Raymond James requested compensatory damages in the amount of $329,680.
In addition to the allegations against Raymond James, Mr. Immel also asserted fraud against Morgan Keenan & Company, Inc. (“Morgan Keenan”), where Mr. Immel had worked from 2001 until 2013, when Raymond James acquired the firm. This allegation related to Morgan Keenan proprietary funds that Mr. Immel not only sold to clients, but also in which he invested his own money. This allegation was withdrawn from his claims prior to the commencement of the arbitration hearings, as Mr. Immel was already participating in a class-action lawsuit and was thus prevented from asserting this claim in the Raymond James matter. As such, and according to the Award, “the Panel did not consider any of [Mr. Immel’s] claims relating to [Morgan Keenan].”
On January 29, 2016, the Panel reached their decision, denying Mr. Immel’s request for expungement, but awarding him $450,000 in compensatory damages, finding merit in Mr. Immel’s claims for unjust enrichment, intentional interference with business relationships and fraud (with regards to Morgan Keenan). As is common in FINRA awards, the Panel did not give any further reasoning for how or why they came to such a determination.
The last portion of their decision regarding the fraud charges against Morgan Keenan is what caused Raymond James to move for vacatur in the Florida courts. Raymond James believes that the Panel improperly gave weight to the fraud at Morgan Keenan in their analysis, defying their own instruction and contradicting the language which appears earlier in the Award. According to their motion, Raymond James argues that “the arbitrators went beyond the authority granted by the parties and decided an issue not pertinent to the resolution of the issues submitted to arbitration.” Under the Revised Florida Arbitration Code Section 682.13, a party may vacate an award if: (1) the award was procured by corruption, fraud, or other undue means; (2) there was evident partiality, corruption, or misconduct by an arbitrator; (3) the arbitrator refused to postpone the hearing upon showing of sufficient cause, refused to hear material evidence; (4) the arbitrator exceeded his powers; (5) there was no agreement to arbitrate; and (6) the arbitration was conducted without proper notice of its initiation.
Brian Neville, a Partner at Lax & Neville LLP (unaffiliated with the matter) who has over 20 years of experience in broker/dealer disputes, was contacted by a reporter for OnWallStreet to comment on this matter. Mr. Neville stated that “[his] prediction is that this case would be confirmed and the second most likely outcome is that it would be sent back to the existing arbitration panel for clarification and/or modification.” Mr. Neville is often quoted in financial publications on the topic of broker/dealer disputes.
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals, and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.