An irreverent Wall Street Blog
FINRA Arbitrators Cite RBC Investigator's Tactics In Disrespectful Award
May 27, 2021
Every so often, I come across something that elicits a "what the hell?" Today's BrokeAndBroker.com Blog features just such an item in the form of two associated persons suing their former employer, RBC Capital Markets, LLC, and another RBC employee. Somehow it all comes down to a lack of respect, or not.
Case in Point
Associated person Claimants Tyree and Hillman filed a FINRA Arbitration Statement of Claim in May 2020 asserting defamation, defamation per se, wrongful termination, breach of the standards and customs of the securities industry as evidenced by violation of FINRA rules and regulations, fraudulent
misrepresentations, and negligent misrepresentations. In the Matter of the Arbitration Between Edward ("Ned") Christian Glass Tyree, III
Tammy Hillman, Claimants, v. RBC Capital Markets, LLC. and Richard Ruckart, Respondents (FINRA Arbitration Award 20-01411)
https://www.finra.org/sites/default/files/aao_documents/20-01411.pdf
https://www.finra.org/sites/default/files/aao_documents/20-01411.pdf
Respondents RBC and Ruckart generally denied the allegations and asserted various affirmative defenses.
As asserted in part in the FINRA Arbitration Award:
At the hearing, Claimant Edward ("Ned") Christian Glass Tyree, III requested an award of damages in the amount of $1,024,166.00. Claimant Tammy Hillman requested an award of damages in the amount of $450,000.00. Claimants requested punitive damages in an amount to be set by the Panel. Claimants also requested expungement and sought a re-characterization on the Form U5 of the Reason for Termination from "discharged" to "voluntary." Claimants further sought the removal of the Termination Explanation on the Form U5.
Motion to Dismiss
Respondent Ruckart filed a Motion to Dismiss arguing that he was not associated with the conduct at issue (citing in support FINRA Rule 13504(a)(6)(B)), and that he was also entitled to the affirmative defense of "qualified privilege." Additionally, Ruckart asserted that Claimants' claims did not arise from any alleged conduct by him but, to the contrary, solely from Respondent RBC's decision to terminate Claimants' employment and certain disclosures made by the firm on Claimants' Forms U5 regarding their terminations.
In response to the Motion to Dismiss, Claimants asserted that Respondent Ruckart was "clearly connected to the dispute at issue because he was the source of the e-mail that constituted the basis upon which Claimants were terminated." After taking oral argument, the FINRA Arbitration Panel dismissed the Motion to Dismiss.SIDE BAR: FINRA Code of Arbitration Procedure for Industry Disputes Rule 13504. Motions to Dismiss(a) Motions to Dismiss Prior to Conclusion of Case in Chief. . .(6) The panel cannot act upon a motion to dismiss a party or claim under paragraph (a) of this rule, unless the panel determines that:. . .(B) the moving party was not associated with the account(s), security(ies), or conduct at issue; or . . .
Award
The Panel dismissed with prejudice all claims against Respondent Ruckart.
The Award then states in part that:
2. The Panel found Respondent RBC's investigator's interview tactics to be in need of corporate review. However, Respondent RBC's investigator's inappropriate interview tactics do not amount to wrongful termination under North Carolina law. Additionally, violations of FINRA Rules do not support private causes of action. Therefore, Claimants' claims against Respondent RBC are denied in their entirety, with the exception of granting limited expungement relief described below.
Paragraph 2 above puzzles me. Was Ruckart the investigator? If Ruckart was not the investigator, who the hell was? If another individual was the investigator, then why wasn't that person's name set forth in the Award? Frankly, this confusion may be a gross injustice upon Ruckart. More to the point, this confusion is yet another example of the lack of quality control at FINRA when it comes to cursory reviews of final drafts of FINRA Arbitration Awards.
The Panel left the "Reason for Termination" in place for both Claimants, but the arbitrators recommended the expungement of the "Termination Explanation" from Claimants' Forms U5 so that the explanation is deleted and replaced with the following for Tyree and Hillman, respectively:
"Violation of RBC's written respectful communication policies by sending two emails which violated those policies. Conduct did not involve customers, customer accounts, or sales practices.""Violation of RBC's written respectful communication policies by replying to one email which violated those policies. Conduct did not involve customers, customer accounts, or sales practices."
As I said when I opened today's blog: What the hell?
Respectful communications?? As in that the three emails were not written in a "respectful" manner as required by RBC's policies?
So . . . Tyree and Hillman were terminated for sending disrespectful emails? Disrespectful how? Notably the emails did not involve customers, customer accounts, or sales practices -- which naturally prompts the question as to just what they did involve: Disrespectful comments about the office Super Bowl pool?
Making things even more bizarre, some RBC investigator's interview tactics were cited by the arbitrators as "in need of corporate review. However, Respondent RBC's investigator's inappropriate interview tactics do not amount to wrongful termination under North Carolina law." Ummm . . . what??? An RBC investigator allegedly engaged in "inappropriate tactics" while investigating three allegedly disrespectful emails sent by Claimants, but, notwithstanding, those tactics did not rise to the level of actionable "wrongful termination." Like what am I supposed to imagine -- that the investigator pretended to fire the Claimants?
I mean for godsakes, are you kidding me?
You're going to toss all of that out there, leave it on the industry records of two Claimants and one Respondent, and not even bother to explain just what is meant? For starters, what kind of investigative tactic could be confused for a wrongful termination? What aspect of the tactics were so over the top that the arbitrators cited them for corporate review?