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Hymn for the Missing FINRA Public Customer Claimant
December 18, 2018
After reading a recent FINRA Arbitration Decision about a public customer case, we don't come away with much of a sense as to where things ended. Oh, sure, the arbitrators dismissed all of the customer's claims but we seem to think that the case may have settled. Or not. Unquestionably, we are lost. We're not even sure that we can find our way back to where we lost the scent. Alone and afraid, we keep searching for answers but can't seem to find them. Respondents came to the hearing and stayed but they said that the case had settled. Claimant never appeared at the hearing and insisted that there was no settlement. Where do things stand now? Will we ever catch up? Will we ever understand what the hell happened here? Probably not.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in October 2017, public customer Claimant Shaper asserted unsuitable transactions, failure to supervise, and respondeat superior arising from the alleged failure of Respondents Aitken and Tressler to comply with their responsibilities as Claimant's registered representatives by purportedly over-concentrating Claimant's investments in Mako Surgical Corp., Molycorp Inc., and Patriot Coal Corp. Also, the claims arise from the alleged failure of Respondents Liberty Partners Financial Services and Woodward to properly supervise Respondents Aitken and Tressler. Claimant Shaper sought at least $173,535 in compensatory damages and fees. In the Matter of the FINRA Arbitration Between Stephen J. Shaper, Claimant, vs. Liberty Partners Financial Services, LLC, Todd David Aitken, Andrew Jonathan Tressler, and Cassandra Taleen Woodward, Respondent (FINRA Arbitration 17-02783, December 7, 2018).
The FINRA Arbitration Decision asserts the following "Representation of Parties":
For Claimant Stephen J. Shaper ("Claimant"): Jennifer Tarr, Cold Spring Advisory Group, New York, New York.For Respondents Liberty Partners Financial Services, LLC ("Liberty"), Todd David Aitken ("Aitken"), Andrew Jonathan Tressler ("Tressler"), and Cassandra Taleen Woodward ("Woodward"), hereinafter collectively known as "Respondents": Eric J. Sussman, Esq., Baldwin, New York.
Respondent Liberty Partner Financial Services, LLC and Respondent Woodward did not file a Statement of Answer and did not sign a Submission Agreement.
Respondents Aitken and Tressler filed a Statement of Answer, generally denied the allegations, and asserted various affirmative defenses.
Unsettled Settlement
After having deferred until the hearings any ruling on Respondents' Motion to Dismiss and Claimant's Motion to Bar Respondents from Presenting Any Defenses or Facts At Hearing, the FINRA Arbitration Panel proceeded to the hearing on the merits. As set forth in pertinent part in the FINRA Arbitration Decision:
AwardA hearing on the merits was scheduled for October 9, 2018. On October 8, 2018, Respondents filed a Notice of Settlement. On October 8, 2018, Claimant emailed FINRA Office of Dispute Resolution, stating that the case had not yet settled and the parties had only agreed to cancel the first day of the hearing. Claimant did not submit a filing for the Panel to consider, so the Panel did not rule on the issue of postponement.The hearing proceeded on October 9, 2018, at which time the Panel allowed Respondents to participate by telephone, as previously requested by Respondents. Neither Claimant nor any representative for Claimant appeared at the hearing. At the hearing, Respondents' counsel informed the Panel of the status of the settlement negotiations. At the close of the hearing, the Panel verbally ordered Respondents to provide a post hearing submission to address their costs by October 12, 2018 but closed the record to all other submissions.On or about October 12, 2018, Claimant filed an Application for an Immediate Conference with the Panel. On or about October 12, 2018, Respondents filed an Opposition to Conference and Reopening of Hearing. On or about October 12, 2018, Claimant filed a Reply to Opposition for an Immediate Conference with the Panel. The Panel considered the filings and herein denies Claimant's Application for an Immediate Conference.
The FINRA Arbitration Panel denied Claimant's claims.
Bill Singer's Comment
During my nearly 37 years on Wall Street, I've likely read thousands of rules, rulings, orders, opinions, and decisions. Consequently, it is with some sense of amazement that I have to admit that I truly have no idea what the hell happened in this FINRA Arbitration. The FINRA Arbitration Decision states that "Claimant's claims are denied in their entirety." I mean, sure, that's pretty clear but what happened just before the arbitrators dismissed the case?
On October 8, 2018, the Respondents filed a Notice of Settlement with FINRA.
Great -- the FINRA Arbitration settled!
On that same October 8th, however, Claimant stated that no such settlement had occurred and that the "parties had only agreed to cancel the first day of hearing." That first day was scheduled to kick off on October 9, 2018.
Umm . . . gee, not-so great . . . the FINRA Arbitration appears to have unsettled but for all parties agreeing to cancel the first day of hearings.
And so, the October 9th hearing didn't take place because the parties had agreed to cancel it . . . except, lo and behold, the FINRA Arbitration Decision states that "hearing proceeded on October 9, 2018, at which time the Panel allowed Respondents to participate . . . Neither Claimant nor any representative for Claimant appeared at the hearing."
So, which was it? The case settled or it didn't? The October 9th hearing was cancelled or it wasn't? Why did the arbitrators hold the October 9th hearing and how come the Claimant was missing?
If Respondents had failed to show up for the first day of hearings on October 9th, I could sort of understand why: They may have thought that there was a final settlement in place and there was no need to make opening statements, present evidence, or examine witnesses. That logic aside, let's keep in mind that the Respondents, who were the folks who told the FINRA Arbitration Panel that there was a settlement, showed up. On the other hand, it was Claimant who informed the arbitrators that there was NO settlement but only an agreement to cancel the October 9th hearing session. So . . . okay, maybe Claimant didn't show up because the customer believed that the October 9th hearing was adjourned. Except the Decision says that "Claimant did not submit a filing for the Panel to consider, so the Panel did not rule on the issue of postponement." Not ruling on the postponement aside, did anyone from FINRA email or telephone Claimant to clarify that the October 9th hearing was going off as planned? Similarly, did Claimant bother to reach out to FINRA to confirm that the first day of hearing had, in fact, been cancelled?
The FINRA Arbitration Decision informs us that the three arbitrators were sitting in a hearing room on October 9th with only the Respondents appearing, and:
[R]espondents' counsel informed the Panel of the status of the settlement negotiations. At the close of the hearing, the Panel verbally ordered Respondents to provide a post hearing submission to address their costs by October 12, 2018 but closed the record to all other submissions.
In a somewhat absurd fashion, October 12th arrives and Claimant applies for an immediate conference, which Respondents opposed. Why did Claimant seek a conference? What's the difference between a plain-old conference and an "immediate" one? A conference about what? Assuming that the case hadn't settled, why didn't the arbitrators conduct a plenary hearing on October 9th or reschedule a plenary hearing session? Assuming that the case had settled, how do we reconcile that with the Panel dismissing all of Claimant's claims and entertaining costs?
Frankly, someone at FINRA should have done some quality control and gone back to the Arbitrators and urged them to add just a few words of explanation about the now-you-see-it-now-you-don't settlement. And while someone is redrafting this mess of a Decision, howsabout you toss in some additional words explaining why the October 9th hearing wasn't adjourned after Claimant informed the Panel that it had been. Yeah, I agree that Claimant should have formally moved to adjourn the hearing and should have shown up absent some ruling by Panel, but we don't even know if the Panel received motions to adjourn from any party and/or whether FINRA Staff notified any of the parties that the October 9th hearing was going forward. We do know, however, that Respondents showed up at the appointed hour. It's just that we got all these dots and no one is connecting them for us.
In closing, I offer a hymn for missing FINRA public customer Claimant Shaper, who may have settled or may not have and who didn't appear at the hearing session but did or didn't think he was supposed to and who demanded an immediate conference for reasons that we may never know.
Where are you now
Are you lost
Will I find you again
Are you alone
Are you afraid
Are you searching for me
Why did you go I had to stay
Now I'm reaching for you
Will you wait, will you wait
Will I see you again