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Scanlon & Elliott scores win in difficult FINRA case
SHERRY KARABIN
Legal News Reporter
Published: April 14, 2017
A fixture in the Akron community for over 30 years, the plaintiff personal injury firm of Scanlon & Elliott handles a wide variety of cases especially those involving medical malpractice, products liability, serious or catastrophic accidents, employment and securities/investments and FINRA (Financial Industry Regulatory Authority, the industry’s self-regulatory organization).
In May 2015, attorney Michael Elliott began representing John Gross, a former broker and registered representative at PNC Investments in a FINRA arbitration resulting from his January 2015 termination.
“For someone who works in the financial services industry, a firing could be the end of that person’s career because the termination is listed in FINRA’s central registration depository (CRD),” said Elliott. “This central licensing and registration system contains the employment records and other information for broker-dealers in the U.S. securities industry and its regulators.
“When someone like Mr. Gross applies for another job in the industry, the human resources department has access to this information,” said Elliott. “My client came to me because he believed this record was keeping him from getting another job.”
The claim filed in the FINRA arbitration forum on behalf of Gross not only sought to get the record expunged, it also alleged defamation, libel, misconduct, wrongful termination and wrongdoing in connection with the termination of employment.
Elliott was seeking $50,000 in compensatory damages as well as attorneys’ fees.
According to arbitration documents, PNC Investments denied the allegations and asserted various affirmative defenses.
Elliott said John Gross began his employment at PNC as an investment service associate. On Oct. 6, 2014, he was promoted to a senior investment service associate. In order to be promoted to the senior position, he once again had to go through the re-employment process.
“It was during the re-employment process that Mr. Gross was terminated,” said Elliott. “As is the standard within the financial industry, PNC notified FINRA of Mr. Gross’s termination and the reasons therefore. PNC’s statements submitted to FINRA effectively barred John Gross from the industry. The PNC comments were believed to be defamatory in nature.”
Following his dismissal from PNC, John Gross was immediately offered employment with a securities firm, said Elliott.
“As part of the employment process the firm conducted its own investigation. As one would expect, an issue concerning Mr. Gross’s termination from PNC was quickly raised. John Gross was told that because of the information submitted to FINRA he was unemployable.”
Gross came to Elliott to see if anything could be done to repair his damaged record.
“I heard John’s story and I could not believe the unfairness,” said Elliott. “But I also understood and appreciated the difficult battle ahead. This is a self-regulated industry and industry insiders often sit on these panels.
“FINRA cases of this nature are very difficult to win, but Mr. Gross was committed to going forward with the matter.”
A three-day hearing in front of a FINRA panel of arbitrators took place in March 2016 and a decision was handed down in September in favor of Gross.
The panel recommended expungement of the termination explanation in Section 3 of Gross’s CRD, stating that the language should be expunged in its entirety and replaced with the following: “A FINRA arbitration panel determined that the termination of John Gross by PNC Investments was arbitrary and unreasonable.”
The panel also awarded twice the economic damages or $102,413 with a 6 percent interest rate until it was paid in full, along with an additional $22,172, which represented an award for the full amount of attorneys’ fees.
“I have never seen such a positive result in a FINRA case,” said Elliott. “I started off by telling Mr. Gross that if we were able to get his record expunged it would be a home run. This award went beyond my expectations.”
Locke Lord attorneys Gary J. Lieberman and Heather Pierce (now shareholder and special counsel respectively at Littler Mendelson) represented PNC Investments in the matter. The Akron Legal News reached out to both attorneys but did not get a response. Marcey Zwiebel, director of corporate public relations at PNC Bank, told the Akron Legal News that the company does not comment on legal matters.