A Tale of Two FINRA Brokers
In-person appearance of a FINRA registered representative at a FINRA Disciplinary Hearing is mandatory.
“Financial Industry Regulatory Authority barred an ex-Wells Fargo broker from association with any FINRA member in any capacity after he refused to appear for on-the-record testimony as part of an investigation into the events that resulted in his termination from the firm for “unprofessional conduct,” according to FINRA as reported May 21, 2020 at ThinkAdvisor.
Why is it then acceptable for a FINRA Registered Representative, the Chief Legal Officer of the fifth largest US bank’s broker-dealer, USBI, to refuse to appear for “on-the-record testimony”, as a named Respondent, unless the customer paid Ms. Van Horn directly unlimited “costs of appearances” for her (1) lost professional time, (2) daycare for all her children, (3) to luxury travel and lodging and per diem? Ms. Van Horn was already paid for her time as a USBI and USB employee. Why did she then demand additional, excessive and unreasonable compensation from her customer if she were to testify under Oath, in person, at the FINRA Hearing?
FINRA Rules assume and write -all “parties” will be at the Hearing. The only discussion in the Customer Code of Arbitration for payments to witnesses by a customer refers to non-parties, not a named Party, like Ms. Van Horn in the subject FINRA Arbitration. Here is the FINRA Customer Code of Arbitration Rule, 12513:
“(g) Unless the panel directs otherwise, the party requesting the appearance of witnesses by, or the production of documents from, non-parties under this rule shall pay the reasonable costs of the appearance and/or production.”
Ms. Van Horn did not demand “reasonable costs”. They were excessive and in no way reasonable. The customer could not afford an unlimited financial liability to US Bank, in retirement, and told Ms. Horn that fact. Ms. Van Horn was notified that Claimants deemed these financial costs, with no cap, extortion. If Ms. Van Horn did not remove the demanded payments and request the Panel rescind the subsequent Order for Ms. Van Horn’s demanded costs, the customer would be forced to remove her and the other two USBI individual respondents.
Ms. Van Horn refused to put a cap or ceiling on her demanded costs, prior to appearance, as Claimants requested of her. Ms. Van Horn threaten Claimants financial assets through such a demand, that the Claimants could not afford and made false and defamatory claims agains the Claimants to ensure her extortive demands were successful.
Claimants were forced to remove Ms. Van Horn, Jeffrey Brown and Kristi Vos Koshire as named respondents due to the extortive threat. They could not afford such an unlimited financial liability.
An expungement Hearing was not necessary. Ms Van Horn thus did not have to appear under oath for questioning, since Claimants could not afford a significant financial liability to US Bank (Ticker USB). This is “witness tampering” through extortion or a new easy way for a broker to have their record expunged- simply mandate unlimited financial costs against your customer in an Arbitration and they will remove you, unless the Claimants have unlimited means to accept an unlimited financial liability to one of our nation’s largest banks and broker-dealers.
One must note there is no explanation in the written Awards document of why the three USBI individual respondents were removed with prejudice. Ms. Van Horn had filed a Motion to Dismiss herself as an individual respondent which was denied by the FINRA Panel. The Panel was convinced of their potential liability and did not permit them to be removed as named Respondents.
Why then would the Claimants, just three weeks prior to the evidentiary Hearing remove Ms. Van Horn and the other two individual respondents with prejudice?
Despite a lengthy, grossly misrepresentative and non-factual Award filing by FINRA, there is no mention of why Ms. Van Horn was removed with prejudice. That is a very significant “hole” in the unusually lengthy Awards document, filled with non-factual, false statements and a very targeted attack on the reputation of the Claimant, based on hearsay and false/defamatory opinions and false/defamatory statements by Ms. Van Horn to force Claimants to remove her as a named Respondent.
Why was there no reference to Ms. Van Horn’s removal as a named Respondent in the Awards Online? She was removed solely because of her financial threats against the Claimants and FINRA would not permit the actual facts to be written into the public record. Defame the customer on the record to conceal the facts of the extortive demands that forced Claimants to remove Ms. Horn with prejudice a few short weeks before the Hearing.
FINRA is permitting a double-standard that is not protecting customers from abuse and securities law violations. FINRA is permitting FINRA Member Firms, like USBI, to engage in extortive demands of the very customers the SEC and Congress have ordered them to protect.
If FINRA bars a broker from refusing to appear at their “Hearing”, why is FINRA permitting Orders against customers, demanded by their Member Firms, to pay extortive sums to a broker if they want them to appear at their Hearing and testify under Oath?
It is ironic that USB’s CEO Andy Cecere said in US Bank’s press release as a 2020 World’s Most Ethical Corporation, “Our commitment to doing the right thing is at the heart of everything we do,” said Andy Cecere, chairman, president and chief executive officer. “I’m proud of the work our employees do every day to earn and keep the trust of our customers. This honor belongs to them.”