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Employees File Stockbroker Arbitration Claims

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New York, NYWhen it comes to stockbroker arbitration, people usually think of situations involving stockbroker fraud as being worthy of filing a Financial Industry Regulatory Authority (FINRA) claim. But in one recently decided case, the stock fraud arbitration panel decided in favor of the claimants, who alleged sexual harassment on the part of the respondents.

According to Bill Singer at (05/10/11), the claimants alleged they suffered sexual harassment, retaliatory firing, emotional distress, a hostile work environment and a host of other unethical actions on the part of their employers. They filed the FINRA arbitration seeking $5 million each in compensatory damages and $10 million in punitive damages, plus reinstatement to their former positions.

The claim was filed against Empire Financial Holding Company, Empire Financial Group, Inc., Jesup & Lamont, Inc., and two individual respondents. Because Empire Financial Holding Company is not a FINRA member, the panel did not make any decision regarding the claims against that company.

The panel did find that one individual respondent sexually harassed the claimants and ordered him to pay more than $1 million, which is split between the two claimants. Claims against the other individual respondent were denied, with the panel finding that there was not enough proof that he had sexually harassed the claimants.

Meanwhile, Merrill Lynch lost its claim to a $3.3 million signing bonus given to an employee who later left his job when he was about to be fired. Merrill Lynch argued that the former employee should repay the bonus. The arbitration panel, however, disagreed, saying the former employee could keep the bonus and should be paid for work done before he left his position.

The former employee, however, argued that he was fired because the financial firm wanted to recover the large bonus given to him. According to The Wall Street Journal (05/09/11), Merrill Lynch filed a claim seeking repayment of the $3.3 million bonus.

Although the FINRA panel sided with the employee on the matter of the bonus, it did not award him the $26 million he sought for the 14 years he planned to work for Merrill Lynch.

Even though stockbroker arbitration is usually thought of as a means of dispute resolution for clients who have a claim against their stockbrokers or their financial firms, it can also be used as a dispute resolution for employees (or former employees) who believe they have a claim against their employers.


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