A former Stifel advisor emerged as the winner of an arbitration case involving back-and-forth claims for damages, two years after her exit from the regional broker-dealer.
Stifel pursued advisor Penney Sick for a clawback, asking an arbitration panel for nearly $260,000 in damages for breach of a promissory note. Sick counterclaimed for damages against Stifel and her former branch manager, James Wohlford, alleging sex and sexual orientation harassment and discrimination, FINRA records show.
She also sought damages against Stifel for breach of the implied covenant of good faith and fair dealing, according to the records.
Sick, a former A.G. Edwards advisor, joined Stifel's Vitalia, Calif., office in 2008, along with several other advisors from the now-defunct regional B-D. She parted ways with St. Louis-based Stifel in August 2013, according to BrokerCheck records.
Wohlford, a 27-year industry veteran, also joined the firm from A.G. Edwards at the same time as Sick, according to BrokerCheck. He did not return calls seeking comment.
The FINRA arbitration records detailing the award do not specify the circumstances of the alleged wrongdoing or the panel's ruling, but indicate that all parties deny the allegations against them.
CLAWBACKS THE HOUSE WINS
Attorneys say it's rare for charges of discrimination to be brought to arbitration as it is more often handled in the civil court system, though firms and advisors can agree to take such allegations to arbitration instead.
FINRA could not provide statistics on how often allegations of sexual harassment or sexual orientation discrimination are decided in arbitration. But FINRA does keep a database awards decided by arbitrators. A search using the keywords "sexual orientation discrimination" turned up only 10 cases that resulted in an award, either for or against the advisor, since 1997. A search using the keywords "sexual harassment" turned up 110 cases that resulted in an award.
However, it's not unusual for firms to seek and win bonus clawbacks from advisors in arbitration. Over the past three years, there were more than 2,000 arbitration cases involving alleged breach of promissory note, according to FINRA. Arbitration panels ruled in favor of the firm in 95% of the 600 cases that resulted in an award.
The arbitration panel hearing Sick's case, which was not required to explain its ruling, awarded Stifel only $116,000 for breach of the promissory note about $140,000 less than what the firm asked for.
At the same time, the panel ordered Stifel to pay Sick $236,000 in damages plus $31,000 in costs while also dismissing Sick's statutory discrimination claims. In addition, the panel dismissed claims against Wohlford in their entirety, records show.
It's not unheard of for arbitration panels to award a firm less than the full value of a promissory note as they can take into account such factors as how long the advisor worked at the firm. "Sometimes they'll rule that they are not entitled for the full amount," says attorney and On Wall Street contributor Alan Foxman.
"As to why they awarded the rep damages but found no liability for a statutory discrimination claim, I don't know," Foxman says.
Attorneys for Sick and Wohlford did not return calls seeking comment while a Stifel spokesman declined to comment.