Even Indicted Attorney and Peeping Toms Can be FINRA Arbitrators

Representing Investors Nationwide

The Financial Industry Regulatory Authority (FINRA) arbitration forum, which serves as Wall Street's customer dispute resolution system, has been full of surprises over the years. Once upon a time, FINRA offered a list of potential arbitrators to the parties in a dispute and two of the arbitrators were deceased.

And there was the time a arbitrator represented to FINRA he was a lawyer, but it turned out he wasn't. None the less, the gentleman managed to participate in 38 arbitrations spanning a 15-year period before FINRA staff caught up with him. In yet another bizarre and troubling case, an arbitrator misled FINRA about the terms of his indictment by a grand jury.

You can now add to those stories the previously untold tale of the arbitrator who failed to state on his arbitrator-disclosure report he had been accused of judicial misconduct as well as arrested for voyeurism.  In his defense (insert chuckle) those charges go back a number of years, and reports by psychologists 13 years after his arrest included remarks that his untoward behavior was in "long term remission."

But lawyers for an investor who requested that he be recused from a proposed arbitration panel say FINRA should have known they included in the pool an arbitrator whose judgment could questionable. The story of Mark Adams is just the latest example of the arbitration forum's inability to secure reliable information regarding the backgrounds of the very arbitrators who sit as judge and jury in arbitration hearings.

 This past December, FINRA assigned Adams to a three-person arbitration panel that would oversee an upcoming arbitration brought by an aggrieved investor. Had the case proceeded, it would have been just the third arbitration panel he's been seated on since 2010. 

Apparently unknown to FINRA, Mr. Adams, formerly a Washington Court of Appeals commissioner, had agreed in a negotiated stipulation with the state's Commission on Judicial Conduct on August 26, 1991, he would no longer serve in any judicial office in the state because of what the commission called "acts of judicial misconduct."  Not only did he fail to include this consent action on his arbitrator disclosure report, but FINRA failed to pick it up in the vetting it describes as standard operating procedure before putting an arbitrator on a panel.

Theoretically, FINRA disqualified anyone who has been the subject of adverse disciplinary action by a professional body for non-technical violations. As such, Mr. Adams should have disclosed the stipulation when he applied to be an arbitrator and subsequently disqualified.  Thankfully, the attorney's for the Claimant found out before it was too late.

The experienced securities litigation attorneys at Colling Gilbert Wright & Carter have litigated and resolved hundreds of FINRA arbitration claims. If you believe you lost money due to negligence or fraud on the part of your FINRA registered broker dealer, please contact us for a free case evaluation.

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