A few weeks ago, I discussed the manner in which Jesup & Lamont was dealing with FINRA. For your ease of reference, the post is here. I suggested that this was a foolhardy approach to dealing with the organization that decides whether or not you stay in business.
Investment News described Jesup as “feisty” and described its dispute with FINRA and Penson Financial Services, its former clearing firm, as “nasty.” Now another adjective can be added to the list – “sanctionable.” In a recent FINRA arbitration award a FINRA arbitration panel gave “feisty” Jesup its requested relief on the Claimant’s employment claim, which was a zero. And then the panel, which contained two arbitrators that I know are experienced, assessed sanctions against Jesup in the amount of $60,000. I can honestly say that I have never before seen a discovery sanctions amount in arbitration that was more than $10,000. There is a fair bit of discussion in the award about the discovery issues in the case. At one point, Jesup was told to produce documents or face a daily fine of $500.
Who represented Jesup in this most recent case? According to the award, it is none other than the company’s general counsel, Todd Zuckerbrod. And what of the dispute with Penson? Jesup lost that case, too. No sanctions were awarded there, though. Mr. Zuckerbrod was listed as counsel of record in that case, too.
It’s only my opinion, but I don’t think “feisty” is the adjective one would want applied to one’s broker/dealer. Of course, “the firm that was sanctioned $60,000 for failure to comply with discovery” isn’t very attractive either. If Jesup had simply lost $60,000 in damages, that’s pretty easy to deal with. Each case has its own facts and the cases rise and fall on those facts. But it is foolish to give your future opponents the ability to say the following “Mr. or Mrs. arbitrator, it should be no surprise that we have discovery problems with Jesup, here is a copy of the award where the firm was sanctioned $60,000 for failure to comply with discovery.” In my opinion, that’s much harder to explain away.
That’s the bemused view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.