Ameriprise Inexplicably Loses Promissory Note Case
September 21, 2015
It sort of looked like an open-and-shut case in which Ameriprise went after a former employee for some $62,000 in balances due on two promissory notes. I mean, you know, these "collection" arbitrations generally wind up with verdicts for the employer. This time, however, things get turned on their head amid allegations by the former employee that he was pressured to push insurance product -- and there was a stunning allegation that the firm's back-office and technology just weren't up to the task.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2013, Claimant Ameriprise Financial Services sought to recover the unpaid balances on promissory notes dated February 11, 2009, and February 16, 2010, following the purported end of Respondent Walker's employment around March 20, 2012. Ameriprise sought $47,124.97 and $15,058.70 compensatory damages on the respective notes plus interest, attorneys' fees, and costs. In the Matter of the FINRA Arbitration Between Ameriprise Financial Services, Inc., Claimant, vs. Victor Walker, Respondent (FINRA Arbitration 13-00965, September 11, 2015).
Not Going Quietly
Respondent Walker generally denied the allegations and asserted various affirmative defenses. Walker filed a Counterclaim asserting causes of action including wrongful termination, breaches of contract and fiduciary duty, fraud, and tortious interference with business relationships.
SIDE BAR: Although not disclosed in the FINRA Arbitration Decision, online FINRA BrokerCheck records as of September 21, 2015, Ameriprise "Discharged" Walker on March 20, 2012, based upon allegations that:
ADVISOR TERMINATED FOR COMPANY POLICY VIOLATIONS RELATED TO COMPLYING WITH DISCIPLINARY ACTION, ACCEPTING OR ENTERING ORDER OR TRANSACTIONS REQUESTS AND RESTRICTED AND PROHIBITED ACTIVITIES.
In response to those allegations, the online BrokerCheck records disclose Walker's response:
I DENY ANY ALLEGATION OF WRONGDOING OR INVESTMENT RELATED VIOLATIONS. IN MY OPINION AMERIPRISES WRONGFUL TERMINATION IS BASED ON HERESAY [sic] AND IS DEFAMATORY IN NATURE.
Following the start of his employment with Claimant Ameriprise, Walker asserted that the firm's back office incorrectly handled his transfer paperwork causing a delay in his ability to handle accounts and also inhibited his ability to build a book of business. Moreover, Walker claimed that Ameriprise:
constantly tried to sell him on the need to sell their clients various insurance products, which caused interference in his work day and contributed to lost business momentum. Respondent lastly alleged that constant technology and software failures prevented him from documenting his communication with clients in Claimant's client contact software system and this resulted in lost accounts and income.
Walker sought $475,000.00 in compensatory damages plus punitive damages, interest, attorneys' fees, costs, and the expungement of his Form U5.
The Arbitrators Decide
The FINRA Arbitration Panel denied Claimant Ameriprise's claims.
The Panel denied Respondent Walker's counterclaims and request for expungement.
SIDE BAR: One of the three arbitrators dissented as to the denial of Ameriprise's claims but concurred with the denial of Walker's counterclaims .
Bill Singer's Comment
No, I'm not enamored with this Decision. Frankly, the three arbitrators left us out to dry with virtually no explanation for their actions, notwithstanding that the Panel was split 2:1.
It's not everyday that a former employer fails to collect on the balances purportedly due and owing on promissory notes. Ameriprise got zippo from this FINRA Arbitration Panel but we aren't given a single explanation as to why. It's nice that one of the three arbitrators was so worked up and dissented but we don't have any explanation for her dissent -- which is made all the worse because we don't have any explanation from the majority explaining their ruling against Ameriprise. What was the Panel's rationale in dismissing Ameriprise's collection case? Did they deem the promissory notes defective? Did they deem Walker's allegations as so meritorious that such a conclusion somehow rendered the notes non-collectible -- if so, what was the rationale? Alas, we have no explanations.
Then there is that whole bit of titillation about Respondent Walker's allegations involving Ameriprise's heavy-handed pressure to sell insurance. On top of that, Walker also raised issues about his former employer's back-office competency and the stability of its technology platform. Was the majority of the Panel swayed to dismiss Ameriprise's case based upon Walker's assertions? We have no idea. Ultimately we are left with an apparently irreconcilable outcome: If Walker's allegations were substantive enough to warrant the dismissal of his former employer's claims on the balances due on two promissory notes, then how come those same allegations didn't result in an award to Walker on his counterclaims and requested expungement?
This FINRA Arbitration Decision reminds me of the story about the guy who gets on an elevator with only two other passengers, and they all head down to the lobby. As the doors close, the visitor hears one of the two other passengers say:
"So that's amazing, it was just the defendant and the dead body in the windowless room when they opened the locked door?"
"Yeah, they heard the shot, immediately unlocked the door, and they saw the defendant standing over the deceased with a smoking gun in his hand."
"But the defendant swore he was innocent?"
"More than that, he claimed that he had proof! They all thought he was nuts. He wouldn't even take a plea and insisted on going to trial."
"What happened in court?"
"The jury found him not guilty!"
"Oh my god, that's incredible. What was his proof?"
"You're not going to believe it. I still don't and I was his defense lawyer. I mean, sure, now I know for certain he didn't do it but it was still the most amazing twist you can imagine. Turns out that . . ."