Wanton Disregard Cited In FINRA Raiding Arbitration

October 27, 2016

When BrokeAndBroker.com Blog publisher Bill Singer gets frustrated, he gets hungry. Today, Bill is very frustrated with an intra-industry FINRA arbitration. The dispute set up as a fairly interesting one involving allegations of unfair competition and raiding. In addition to the usual former employer versus former employee parties, we also have the new employer cast in the role of possibly aiding and abetting its new employee's misconduct. On top of everything, the arbitrators really, really, really didn't like some of the respondents actions, which the arbitration panel slammed as "wanton disregard." Unfortunately, just when we thought we were going to get a nice morsel to chew on, the FINRA Arbitration Decision leaves us hanging. That got Bill's stomach acids working overtime. Fact is, he's got a dying urge for Wonton Soup.

Case In Point

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2015, Claimant BMO Harris Financial Advisors, Inc. asserted:
  • breach of contract; 
  • unfair competition and raiding; 
  • tortious interference with contracts between Claimant and its customers, with business relations, and with prospective economic advantage; 
  • breach of duty of loyalty; 
  • aiding and abetting breach of fiduciary duty of loyalty; and 
  • tortious interference with contract. 
That above laundry list of causes of actions clearly alerts us that the parties are in a gladiatorial fight to the death. The business folks involved in fomenting this crap should know better but they rarely do; and the lawyers that they hire loooooooove this stuff since it's often a massive hourly fee. Ave Imperator, morituri te salutant.

Claimant BMO alleged that after Respondent Moscicki resigned on July 31, 2015, he violated his employment agreement's non-compete covenant when he began contacting all of the customers he had previously served while employed with BMO. Further, Claimant alleged that "in exchange for a large share of the transfer of these clients," Respondent Wintrust offered Respondent Moscicki a substantial forgivable loan. As of November 2015, Claimant alleged that Respondent Moscicki had solicited the transfer of a large amount of assets from Claimant BMO to Respondent Wintrust. Claimant sought unspecified compensatory and punitive damages, fees, and costs. In the Matter of the FINRA Arbitration Between BMO Harris Financial Advisors, Inc., Claimant, vs. Wayne Hummer Investments, LLC, d/b/a Wintrust Wealth Management and Neil Moscicki, Respondents (FINRA Arbitration 15-02080, October 11, 2016).

Respondents requested the dismissal with prejudice of Claimant's claims 


Following four hearings in September and October 2015 on Claimant's Request for a Permanent Injunction, the FINRA Arbitration Panel imposed a Permanent Injunction. Unfortunately, the FINRA Arbitration Decision does not provide us with the parameters of the Permanent Injunction.


The FINRA Arbitration Panel found Respondent Wayne Hummer Investments, LLC, d/b/a Wintrust Wealth Management and Respondent Neil Moscicki jointly and severally liable and ordered them to pay to Claimant BMO Harris Financial Advisors, Inc. $1,025,000.00 in compensatory damages and $512,500 in punitive damages. The arbitrators issued such an Award "based on the wanton disregard for the rights of Claimant."

Bill Singer's Comment

Of for godsakes . . . really? FINRA actually allowed this Decision to be issued with so much content and context missing? 

I mean, c'mon, if you're going to award over $1.5 million in damages (of which there is a $500,000 punitive component) and also find that respondents engaged in "wanton" disregard for a claimant's rights, howsabout you offer some meaningful content and context. There is virtually no explanation of the calculation that produced the roughly $1 million in compensatory damages. Moreover, you'd sort of think that there would be some rationale provided as to why the arbitrators tacked on another $500,000 in punitive damages -- and don't tell me it's because they found the misconduct to be "wanton" because that's simply circular reasoning. What conduct added up to not mere disregard for Claimant's rights but wanton disregard? 

As you likely can tell, I am infuriated by this FINRA Arbitration Decision. The facts at issue are frequently litigated in intra-industry disputes and it would help future litigants (and possibly promote settlements) if arbitrators published sufficient commentary so that the industry better understood the deliberative process and how the competing points were weighed.  The momentous nature of the dollars awarded should have prompted something more than X alleged this, Y alleged that, and we find Y engaged in wanton disregard.

Also See:

"FINRA Arbitrators Enjoin Brokerage Raid And Enforce Non-Compete" (BrokeAndBroker.com Blog, January 18, 2012)