When a registered broker-dealer or investment advisor leaves a firm for any reason, the reason is submitted to the appropriate jurisdiction and self-regulatory agencies, including the Financial Industry Regulatory Authority (FINRA). That means that future employers and investors can see the stated reason for the termination when they check the broker or advisor’s record. If a firm falsely reports that the reason was investment related, it can derail the broker or advisor’s career.
This is what happened to Dustin Luckett, a broker with a stellar record, after J.P. Morgan Securities fired him. The firm falsely stated that Luckett had asked a coworker to notarize a client’s document when the client was not present, which is unlawful and violated J.P. Morgan’s policies.
The reality was that Luckett, who was untrained, was simply unclear on whether the document could be notarized under a special rule for known clients. He asked the notary if it could be done, and the notary agreed to do it. However, flags were immediately raised, and the falsely notarized document was never filed. Nevertheless, J.P. Morgan fired both Luckett and the notary.
The blow of the termination itself was followed by the false and defamatory report on the termination that was sent to regulators and made public. Companies that had once been eager to hire Luckett withdrew their offers. Once an up-and-comer in Louisville, he was now cast adrift.
“It put a tremendous strain on him and his family,” Michael Valenti, Luckett’s attorney, told reporters. “His compensation took a huge hit…He had no job for a month. Then the job he got was significantly less money. He had to sell his home.”
Luckett wins arbitration award for defamation
Luckett filed an arbitration complaint through FINRA to try to get his good name and his career prospects restored. It took 13 hearings before the panel of arbitrators came to a decision, but that decision was unanimous and in Luckett’s favor.
The panel awarded Luckett $1.4 million in compensation for his claims, which experts agree is a substantial win in a broker defamation case. In addition to the money, J.P. Morgan will have to expunge and remove the allegation that Luckett’s termination was investment related and due to violating the firm’s notary practices.
Now, Luckett’s record will state that he left J.P. Morgan Securities for non-investment related reasons. The entry will now read, “After a dispute about a clerical process, RR [registered representative] became disillusioned with the company’s atmosphere requiring separation of his at-will employment.”
Major publications have called this a “David vs. Goliath” moment. We were happy to help Mr. Luckett restore his good name and hold a major securities player accountable for their false claim.
