A former Cetera Advisors financial advisor won a huge FINRA arbitration award after accusing the firm of “a premeditated scheme to defame and wrongfully terminate” him.
Under a unanimous April 28
It comes after former
Even though the rulings don’t count as formal precedents as in traditional court cases, the awards appear to be piling up lately, at least on an anecdotal basis, said attorney Steven Gomberg of Lynch Thompson. Gomberg represented
“It influences the arbitration and it shows a pattern of conduct,” Gomberg said of potential future cases filed against the same firms. “It seems to me that there are more and more big-dollar awards for employment claims, which include defamation charges. At the same time, I’m noticing that firms are being more careful in terms of their U5 reasons for termination.”
Representatives for Cetera declined to comment while citing a company policy against discussing legal matters. The firm terminated him after clients alleged he made trades in their accounts without their permission, according to its official disclosure.
Cetera has paid more than $144,000 in settlements of two client claims stemming from Fasanella’s time with the firm after the customers accused him of unsuitable recommendations and misleading advice, his BrokerCheck file
Efforts to reach Fasanella in the Melbourne office with his current firm, Heron Financial Partners, were unsuccessful. The attorneys representing him in the case didn’t respond to an email seeking comment.
Like many
“Although the number is big, we have no underlying details by which to assess what happened here,” Herskovits said. “My best guess is that the arbitrators concluded that Cetera abused the Form U5 to serve some ulterior motive. It certainly would not be the first time a [brokerage] abused the Form U5 process.”
Without knowing more about the nature of the claim, attorney Jenice Malecki of Malecki Law agreed that the arbitrators likely found “no complaints of unauthorized trading” in the course of the proceeding, she said in an email.
“If you look at Mr. Fasanella’s BrokerCheck, in fact, there are no contemporaneous unauthorized trading complaints listed for the broker, and if they existed — they should be there but are not,” she said. “Getting a $3 million award against a brokerage firm for a U5 filing is not routine, so the arbitrators must have been presented with strong evidence. I would hope FINRA would go back on a regulatory basis and find out if there are any conduct-rule violations around what was filed.”
Fasanella spent more than five years associated with Cetera before leaving the firm in 2019, according to BrokerCheck. In the claim filed against Cetera the following year, he accused the firm of wrongful termination, defamation and breaches of contract, good faith and fair dealing, among other allegations that the firm violated FINRA’s rules and applicable laws. He ultimately requested between $1.5 million and $3.6 million in damages, according to the award document.
“The causes of action relate to claimant’s allegation that [the] respondent engaged in a premeditated scheme to defame and wrongfully terminate [the] claimant’s employment with [the] respondent.”
In its answer to the claim, Cetera denied the allegations and asked the panel to dismiss the allegations in their entirety while awarding the firm attorney fees and other costs.
After 24 hearing sessions in November, January and April, the panel held Cetera liable for a payment of $3 million in damages to Fasanella, $10,000 in expert witness costs and $375 for the non-refundable portion of his filing fees. In addition, they recommended the removal of the reason for his termination from the Central Registration Depository as well as changing the official description for his exit to “voluntary.” Fasanella must forward a copy of the award to FINRA’s Credentialing, Registration, Education and Disclosure Department for its review.
