In the award, the arbitrators directed that Mr. Biering’s U5 be amended to (a) reflect a voluntary resignation and (b) remove additional, adverse language originally inserted by JPMorgan. The panel went further, finding that “one of the primary reasons for the timing of the filing of the U-5 was to hinder [Mr. Biering]’s ability to transfer his book of business to a competitor of” JPMorgan. The arbitrators also expressed “concerns” about what they viewed as “a pattern of conduct” at JPMorgan: investigating supposed reasons to terminate advisors after resignation to make moving to a competitor more difficult.

Joshua Iacuone served as lead counsel in FINRA case number 24-01208, working closely with IMcP partners Greg McAllister and Anna Richardson. Bios of IMcP’s Dallas FINRA lawyers are above. Readers can view the coverage in Financial Planning below.

Ex-JPMorgan Advisor Gets U-5 Firing Expunged by arb panel | Financial Planning

In the award, the arbitrators directed that Mr. Biering’s U5 be amended to (a) reflect a voluntary resignation and (b) remove additional, adverse language originally inserted by JPMorgan. The panel went further, finding that “one of the primary reasons for the timing of the filing of the U-5 was to hinder [Mr. Biering]’s ability to transfer his book of business to a competitor of” JPMorgan. The arbitrators also expressed “concerns” about what they viewed as “a pattern of conduct” at JPMorgan: investigating supposed reasons to terminate advisors after resignation to make moving to a competitor more difficult.

Joshua Iacuone served as lead counsel in FINRA case number 24-01208, working closely with IMcP partners Greg McAllister and Anna Richardson. Bios of IMcP’s Dallas FINRA lawyers are above. Readers can view the coverage in Financial Advisor below.

Finra Panel Offers Insight Into Alleged JPMorgan U5 Tactics

To serve as the Chair for a FINRA arbitration, an arbitrator must have completed all the required Chair training and served on a Panel through Final Award on at least three occasions (one if the arbitrator has a law degree). See FINRA Rule 12400 & 13400.  This not only represents institutional knowledge, it means the Chair has the “stamp of authority” to the parties and other arbitrators, who typically have less experience in FINRA arbitrations.

In IMcP’s FINRA and Financial Advisor lawyers’ experience, rarely is the Chair overruled by the other two arbitrators in any pre-trial or final hearing decisions, whether on discovery, evidence, of trial presentation decisions.  Indeed, while not unheard of, it is uncommon for a Chair to be the lone dissenting vote in a 2-1 arbitration Final Award decision.

With no depositions (except in extraordinary circumstances under FINRA Rules 12510 & 13510), no requests for admission, and no general interrogatories, the limited document discovery allowed is crucial to winning a FINRA arbitration.  For this reason, the scope of the document discovery is bitterly fought. Here too, the Chair plays an enhanced role.  Except in a few circumstances, including whether to order a deposition, the Chair will solely determine these key discovery fights.  

We all have biases, whether conscious or unconscious. FINRA arbitration Chairs are no different. Some Chairs are more liberal with discovery, some are more restrictive.  Some Chairs are more industry tilted, some might favor the individual (i.e., customer or Financial Advisor).  And some Chairs may be more willing to award big damages if warranted, while others may be “big numbers” shy. As a licensed FINRA arbitrator for many years, as well as representing Financial Advisors in scores of FINRA arbitrations over 20+ years, IMcP’s Joshua Iacuone uses his unique insight in the all-important rank & strike process.

It is important to review the Chair’s past decisions.  Depending upon the circumstance, it may be a good idea to even contact other lawyers who have practiced before the Chair in past FINRA arbitrations to get a feel for the Chair’s temperament and rulings, especially about discovery.

Accordingly, while it is important to carefully consider all the arbitrators before your rank and strike list is due, it is imperative that you carefully rank and strike, and select, the right Chair for your case.

As the saying goes: an ounce of prevention is worth a pound of cure.  The same concerns and anxiety about leaving the current Firm, such as forfeited compensation, how much of the Note must be paid back, garden leave, etc., should be addressed on the front-end with the new Firm to avoid those same concerns and that same anxiety again if the Financial Advisor chooses, or is forced, to make another move.

For instance, will the new Firm pay legal expenses if the current Firm institutes litigation? Will the new Firm agree to different terms related to forfeiting deferred compensation?  Will the new Firm agree to changes in calculating how and when forgiveness attaches to a Note?  Will the new Firm agree to fairer terms and definitions in the offer letter, including what constitutes “cause” or “retirement.”  What if the new Firm is in the Protocol, which is a necessary condition of your accepting employment, but later leaves Protocol on little or no notice – can you “grandfather in”?

IMcP’s FINRA and Financial Advisor lawyers have over a decade of experience in negotiating with new Firms, gauging the level of “leverage” the Financial Advisor has to extract more concessions, and knowledge of the current “market” terms (i.e., legal protections) for the Financial Advisor’s “asks” of the new Firm.  Typically, the new Firm wants the Financial Advisor as much as the Financial Advisor wants the new Firm, so Financial Advisors must use that leverage at the beginning during the “honeymoon” negotiations with the new Firm.