How a Major Brokerage Firm Failed a Vulnerable Employee

  • Feb 4 2021

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After years of representing clients in workplace discrimination cases in the securities industry, I thought I had seen it all. I realized I was wrong when I heard the shocking treatment my client, “John Doe” (my client’s name is withheld for his privacy), was subjected to at a major Wall Street brokerage firm’s West Los Angeles branch office. Its mistreatment of a vulnerable, disabled employee is why I agreed to represent John and filed a civil complaint on his behalf in the Los Angeles Superior Court (LASC Case No. 20STCV36736). By sharing some of the details of this alleged misconduct, I hope to raise awareness and hasten a wake-up call for workplace disability support, especially in the securities industry.

John Doe had been a successful financial advisor for another larger firm for almost seven years before being recruited by this company. His professional life changed radically when his wife suffered a high-risk pregnancy that threatened their unborn son’s life. With the baby diagnosed in utero as having intrauterine growth restriction, John Doe’s wife could have lost the baby during her pregnancy. The life-threatening conditions for his son were a constant risk.

Shortly after John Doe shared this crisis with his supervisor, his supervisor made a snap judgment that John’s productivity would suffer due to his family crisis and he would be a burden to the brokerage firm. With this perspective in mind, the supervisor and her cohorts embarked on a campaign to push him out of the firm.

The firm began by removing John’s remote access to emails and the firm’s network server, even though the company’s financial advisors are routinely given remote access. The firm then issued a performance warning informing John that he could be terminated if he continued to work from home, forcing him into what were considered work “absences” for caring for his bedridden, pregnant wife.

Singling John out like this was bad, but it quickly got worse.

John’s son was born a month prematurely with severe disabilities, and John was diagnosed with clinical post-traumatic stress disorder (PTSD) as a result of the unrelenting pressures surrounding his family’s health and his workplace issues. John suffered profoundly with depression, thoughts of suicide and a host of other symptoms.

John’s civil complaint alleges that the firm was fully aware of his diagnosis and the circumstances of his son’s birth. But rather than offer John support, the company continued to deprive John of rudimentary privileges it afforded to its financial advisors generally, eventually prohibiting John from even checking emails on his phone. The civil complaint alleges that John’s supervisor went so far as to tell other branch officers not to allow him access to their branch offices, intimating that he was a dangerous person.

And yet, it got worse. Way worse.

John’s complaint alleges that at his most vulnerable moment, when he was deeply concerned about how to financially and emotionally support his ill child and recovering wife, he was forced to take unpaid disability leave when the firm’s disability-leave plan administrator erroneously denied the continuation of his short-term paid disability leave. The complaint further alleges that while John was appealing the wrongful discontinuation, an executive at the firm sought to gain confidential information about John’s mental state and doctor’s positions to torpedo his disability-leave appeal prospects so they could terminate John, and especially so that he could not qualify for long-term disability leave. The firm’s tortious interference with John’s benefits reveals that it had but one goal: to terminate a disabled employee rather than provide lawful benefits, reasonable accommodations and a job upon his return.

When John did attempt to return to the office, his supervisor humiliated him by having the building security publicly refuse access to the building elevators and escort him out as a trespasser. Later that day, John received a telephone call stating he was terminated.

In the simplest terms, a major Wall Street brokerage firm terminated its employee to avoid paying his lawful entitlements, leaving John, his disabled son and his dependent wife without income and health insurance. To add to the tragedy, the firm published on John’s form U-5 that it had “lost confidence in his performance, including his refusal to follow management’s directions and to meet business expectations.” Such a negative public evaluation had the effect of rendering him unemployable in the financial advice industry and without a professional future.

The firm completely ruined John’s professional career, a person they had actively recruited as one of their “rising stars.”

No one is immune to hardship; we all go through tough times at one point or another. Employers have an opportunity, and often an obligation, to provide accommodations when this occurs. In California, the Fair Employment and Housing Act (FEHA) protects workers with both physical and mental disabilities. Unfortunately, there is still a stigma in our society around recognizing and assisting mentally disabled people. There’s much an employer can do to accommodate limitations, and it is generally far less costly than a lawsuit. Some types of reasonable accommodations that could have helped this case include therapy, mentoring or coaching, telework, job restructuring and a modified work schedule. As John’s complaint alleges, the firm never once reached out to him to discuss how it might help him get through this difficult time. In fact, it did the opposite, thereby exacerbating his illness and giving him no chance to recover and do what he did so well before – work and serve his clients. In doing so, the firm gave John no choice but to take legal action to hold the firm accountable for its misconduct.

While many securities industry disputes are subject to mandatory arbitration before FINRA, employment discrimination cases that are based on the violation of a statute are an exception. Since John’s case alleges that the firm discriminated against him based on his disability in violation of FEHA, he was entitled to file his case in state court. This will be instrumental in helping John find justice for several reasons.

The court system allows far broader discovery that FINRA arbitration, including depositions of key witnesses and the power to directly subpoena third parties. In contrast, FINRA arbitrations generally limit discovery to the production of documents and subpoenas to FINRA members, with no depositions or other outside sources readily accessible. In a case where the misconduct involves witnesses not licensed with FINRA, it is beneficial to have the discovery tools available in court actions.

A case like this should be heard in a public forum as opposed to a private arbitration because it is of significance; California has an interest in protecting its citizens from this precise type of predation. While FINRA arbitration may provide a speedier (and therefore less expensive) resolution in some cases, there is no guarantee that the arbitrators hearing the case will have substantive experience in California employment law and no guarantee that if the employee wins, the arbitrators will follow California employment law and award mandatory attorneys’ fees. I selected California state court in the interest of furthering justice for John.

In a case as severe as this, there is only one objective at this point: to recover. On John Doe’s behalf, I hope to help him recover significant economic and punitive damages in a jury trial. I can only hope that will help him and his family heal and recover emotionally. As far as the major Wall Street brokerage firm is concerned, I hope this case educates the company and its peers about the devastating consequences its actions had and prevents any other employees and families from being impacted the same way. Let this case be a lesson to all employers to take mental disabilities seriously and build a culture of support for employees who need help.

Brandon S. Reif is managing partner at Reif Law Group, P.C. As one of the leading attorneys in the securities and financial services industries, Reif has a track record of delivering successful trial verdicts and arbitration awards.

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