An Atlanta-based Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered SunTrust Robinson Humphrey, Inc. (SunTrust) to pay over $4.1 million in damages (including punitive damages, attorneys’ fees and costs) to a former registered representative based on a claim of wrongful termination and malicious defamation in annotating the claimant’s Form U-5 (a regulatory filing) to indicate that he had been “permitted to resign” for “failure to follow firm sales practice policy.” The claim arose out of the sale of Trapeza V, LLC Auction Rate Preferred Securities. The claimant was a 19-year veteran of SunTrust. The case is Lance R. Beck v. SunTrust Robinson Humphrey, Inc., FINRA Case No. 08-02482.
After ten full days of hearings, the panel found that SunTrust was liable, and that it acted with specific intent to harm the claimant, and ordered SunTrust to pay compensatory damages in the amount of $1,192,526.00, plus post-judgment interest at the rate of 7% per annum, punitive damages in the amount of $2,500,000.00, costs in the amount of $50,370.95, and attorneys’ fees in the amount of $419,057.50.
The arbitration panel based its award on the following findings of fact, among others. The panel determined that the claimant did not violate SunTrust’s sales practice policy as claimed by SunTrust, but rather conveyed the same information to the client that the firm placed in its marketing material for the sale of auction rate securities. The panel further determined that the claimant was told that SunTrust would support its products, and that SunTrust had bought back auction rate securities from numerous clients without annotating the other brokers’ Form U-5.
The panel further found that SunTrust terminated the claimant based on one manager’s note that the claimant was a product of the “old regime,” “makes too much money,” and was “walking too long in cushy loafers.” Finally, the panel found that SunTrust completed the claimant’s Form U-5 in such a manner as to make it unlikely he would work as a broker in the future and take clients with him to a new broker-dealer.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. The firm also has an active practice in representing individuals in employment disputes with brokerage firms. The firm is currently involved in representing several brokers in such disputes. The firm has won arbitration award for clients in employment disputes in the amounts of $1.7 million and $3.9 million. For further information, please contact www.pageperry.com