Ameriprise Seeks to Vacate $879,000 Award to Fired Broker
Ameriprise Financial Services has asked a court to vacate a Finra arbitration panel’s decision last month granting a fired broker almost $879,000 in damages, costs and attorneys’ fees and denying the broker-dealer’s counterclaim for balances she owed on promissory notes.
In a petition filed Thursday in U.S. District Court in Boston, Ameriprise argued that one of the three arbitrators failed to disclose his bias toward employees in wage disputes and that it was not allowed to present evidence related to its counterclaim.
Courts set a very high bar to overturning arbitration awards, making petitions to vacate rare, according to lawyers familiar with the process.
The filing follows an award of $675,000 in compensatory damages and more than $200,000 in costs and fees in late January to Cheryle Anne Brady, a broker with 22 years’ experience who is under a six-month Finra regulatory suspension from the industry for allegedly lying to Ameriprise about obtaining oral permission to trade from ten customers before an assistant executed the trades.
Brady, who also has worked at A.G. Edwards, UBS PaineWebber and RBC Capital Markets, filed a complaint against Ameriprise in October 2016 for wrongful termination and defamation, and asked for more than $2 million to compensate for “lost back pay, front pay and Sunset Plan pay,” according to the January award.
The three-person arbitration panel awarded more than the $551,000 she had initially requested for lost earnings over three years and also recommended that her termination papers on file with regulators be changed to say she was fired “without cause” and that there was “no credible proof” that she had authorized the alleged trades.
In its petition to overturn the decision by the three arbitrators, Ameriprise claimed that public arbitrator David Summer “failed to disclose critical information….that showed his clear bias and predisposition in favor of employees in wage and compensation disputes.”
Summer, a Boston-based lawyer, said Friday that he was surprised to hear that Ameriprise singled him out, and noted that he has represented employers as well as employees. “Obviously, they didn’t do much digging,” he said of the firm’s arbitrator-selection process.
Michael Taaffe and Nicholas O’Donnell, the lawyers representing Ameriprise, did not return calls for comment.
“The award is illogical, defies common sense and could only have been entered due to the Panel’s misconduct,” they wrote in the five-page petition to vacate.
The filing alleges that the arbitrators refused to hear “evidence pertinent and material to the controversy” and said that “it is undisputed that Brady lied multiple times during the investigation” by the firm. In recommending expungement of her U5 record, they said the regulatory filing should be changed by Ameriprise to indicate that no customers complained about the trades that her assistant allegedly made without their approval and that they and Ameriprise benefited from the transactions that the firm “allowed to stand.”
Peter Bizinkauskas, the Taunton, Mass-based lawyer who represented Brady, said on Friday morning that he was unaware of the petition to vacate. Throughout the 8-month arbitration process that involved 11 hearing and pre-hearing sessions, Ameriprise “several times agreed to the composition of the arbitration panel,” he said.
Asked about the firm’s bias allegations against Summer and the panel in general, he said, “I have no idea what they are referring to.”
“It is very difficult to get an arbitration award vacated, and the grounds for doing so are very limited,” said Jason Steed, a lawyer at Kilpatrick Townsend in Dallas, who was not involved in the case but has written papers on the Federal Arbitration Act and has represented employers in appeals. “The courts favor arbitration and try to defer to the process.”