Corporate & Securities Law

According to InvestmentNews, a FINRA arbitration panel last month ordered Charles Schwab to pay a former employee $1.8 million in back pay and punitive damages.  Dow Jones Newswires first reported the award last week.  According to that report, Mr. Leahy, a former cashiering director at a Schwab office near Orlando, Florida, processed incoming and outgoing checks. 

In his claim, he said that Schwab made defamatory comments on his U-5 termination notice and that he was wrongfully terminated.  According to FINRA records, he was employed by Schwab from 1991 until 2008.  According to the FINRA award, Schwab conducted an inefficient human resources investigation.  It falsely cited HR violations as the reason for his termination and it included those "false violations" on his termination notice.

The FINRA arbitration panel awarded Mr. Leahy $279,000 plus interest for lost wages.  It then awarded him $1.5 million in punitive damages.  At the heart of the arbitrators' decision was the role of Schwab's HR personnel and procedures in firing Mr. Leahy.  The award, however, didn't make clear the initial conflict between Schwab and its former employee.  The FINRA panel also recommended a change to his U-5.  The reason for termination the panel said, should be changed from "discharged" to "other," and the commentary should be changed from a failure to adhere to human resources policies to "termination without cause."

Schwab "disagrees with the findings and is evaluating the opportunities for challenging the award," according to a spokesperson.

Source:  InvestmentNews