The fate of a fired Raymond James advisor's $450,000 arbitration award hinges on how a judge interprets six words.
The ongoing dispute between Raymond James and its former employee began when the firm fired Mark Immel in February 2014, which the firm says was for management's loss of confidence in him. The spat continued through an arbitration case that concluded in January 2016, when a panel of three arbitrators awarded Immel damages related to his dismissal.
At the start of the arbitration case, Immel had also asked for damages related to alleged fraud by Morgan Keegan – but withdrew that claim before arbitration hearings commenced.
The panel of three arbitrators, however, included the fraud charges in its ruling – and it's that phrase on which Raymond James is basing its bid to have a Florida state court vacate the award.
"The panel finds liability on claimant’s claims of unjust enrichment by Raymond James & Associates, intentional interference with business relationship by Raymond James & Associates, and fraud by Morgan Keegan & Company," the arbitrators wrote in the award.
Raymond James' attorneys say the arbitrators overstepped their bounds by referencing a charge that Immel had withdrawn, "fraud by Morgan Keegan & Company," according to court documents.
Parties to arbitration cases can appeal awards to state or federal courts, but the grounds to do so are limited, attorneys note. Immel is fighting Raymond James' attempt to nullify the panel's decision, according to his attorney, Phillip Snyderburn.
"For the life of me, I don't get where Raymond James is coming from," says Snyderburn, who is based in Maitland, Fla.
Snyderburn says case law is on his client's side in part because both Immel and the firm elected to resolve the dispute through FINRA arbitration.
"The courts are supposed to give great deference to arbitration forums. I've been doing this for 37 years. I can only remember two or three appeals during that time. You just don't see it," he says.
The current dispute centers on the language that the arbitrators used in their decision. The panel ruled on three sets of issues; Immel's claims against Raymond James; Immel's request for an expungement of client complaints that he said were related to alleged fraud committed by Morgan Keegan, a company that he worked for and which was acquired by Raymond James in 2013; and Raymond James' counterclaims for about $330,000 for Immel's alleged breach of promissory notes.
The arbitrators found Raymond James liable for the sum of $450,000 in compensatory damages, and, in a separate sentence, also found the firm to be liable on claims of unjust enrichment, intentional interference with business relationships and fraud by Morgan Keegan.
The panel then denied both Immel's request for expungement and Raymond James' request for damages for the promissory notes. As is customary, the panel did not explain their ruling in the award. The arbitrators also did not expand upon their ruling with regard to the alleged fraud.
The fraud charges were related to Morgan Keegan proprietary funds that Immel sold to clients and in which he also invested $540,000 of his funds. He had worked at the firm from 2001 to 2013, when it was acquired by Raymond James, per FINRA BrokerCheck.
However, Immel withdrew his fraud claims prior to arbitration hearings commencing because he had participated in an earlier class action lawsuit against Morgan Keegan. This prohibited him from seeking damages in arbitration.
The panel acknowledged that and said "it did not consider any of claimant’s claims relating to" the funds, according to a copy of the award.
Raymond James is arguing in state court that by including the fraud claim in their ruling, "the arbitrators went beyond the authority granted by the parties and decided an issue not pertinent to the resolution of the issues submitted to arbitration," according to court documents.
The St. Petersburg, Fla.-based firm notes that both sides "agreed that this issue was not before the arbitration panel."
Snyderburn says that the firm is misinterpreting the award, adding that the arbitrators had to consider the issue of fraud in order to decide whether to grant Immel's request for expungement.
"The only inference from that is that the panel concluded that he was defrauded by [Morgan Keegan] but we're not going to grant expungement because some of those complaints did not relate to RMK funds," Snyderburn says.
A spokeswoman for Raymond James declined to comment on the matter.
The arbitration battle started after Immel was discharged by Raymond James in February 2014 because management lost confidence in him, according to a note listed on his CRD.
Snyderburn says the firm provided Immel no explanation for why he was fired. "They just said, 'The firm is letting you go today, and you need to pack up and go.'"
Immel, who has been an advisor for almost 30 years, has 19 client complaints on his record, per his BrokerCheck record. Nine have been denied or withdrawn while the rest have been settled.
Snyderburn says Immel was hit with four client complaints in 2013, and Raymond James was in the process of defending him in those arbitration cases that year. At roughly the same time, FINRA opened an investigation into the matter, but ultimately did not bring any charges, according to Snyderburn.
A FINRA spokeswoman declined to comment.
"I think that what happened was that the firm perceived that FINRA was starting an inquiry into these four arbitration claims, and that the firm would have to give testimony," Snyderburn says.
Snyderburn says the firm mistreated his client given the manner in which he was let go.
He also points to the fact that Raymond James says that its brokers own their books. If that’s the case, Snyderburn says, the firm unfairly profited when it parted ways with Immel because it kept the $80 million in assets he oversaw.
After Immel left Raymond James, he had difficulty keeping clients because of his termination and the stain of the alleged Morgan Keegan fraud, his attorney asserts. It was also difficult for him to find new employment, Snyderburn says. In May 2014, Immel landed an advisor position with G.A. Repple, a small brokerage firm, according to BrokerCheck records.
In the firm's statement of answer – a legal document rebutting claims filed in arbitration – Raymond James rejected Immel's claims of unjust enrichment, calling them "absurd."
Raymond James also brought up the number of client complaints in arbitration, saying that Immel's three months of unemployment after being fired were not solely a result of fallout from Morgan Keegan's alleged fraud.
To the extent that Raymond James profited from servicing clients that remained after Immel was discharged, "this is a function of pure, American business competition," the firm said.
GET A REDO
Snyderburn says the next step in the process will be a hearing before a judge.
"It will be based solely on legal arguments and there will be no testimony or evidence other than what was admitted in the arbitration proceeding," Snyderburn says.
Raymond James could hope for the award to be vacated entirely, or for the judge to order a new arbitration panel to hear the case again, attorneys say. But the grounds for vacating an arbitration award are very thin, as arbitrators are generally given a lot of leeway, attorneys say.
Among the most common reasons for appeal is that the arbitrators failed to disclose material information about themselves, such as having a son or daughter who works for one of the parties involved in the arbitration case.
Brian Neville, an attorney who is not involved in this case, says that the award would likely stand unchanged in a federal or New York state court.
"My prediction is that this case would be confirmed and the second most likely outcome is that it would be sent back to the existing arbitration panel for clarification and/or modification," says Neville, whose firm, Lax & Neville is based in New York.
A date has not yet been set for Immel and Raymond James' hearing before the Florida judge.