….And FINRA Justice for All

For the longest time, Al Pacino was my favorite actor (I think Clint Eastwood finally surpassed him). Pacino earned an Academy Award nomination for a film that is pretty much forgotten “…And Justice For All”. For the longest time I’ve had a poster from that film and it’s one of my most treasured relics from law school only because the poster says “Once in A While, Someone Fights Back”. It sits in the corner of my office, next to the signed Hank Aaron photo that belonged to my mentor in the 401(k) business, the late, great Richard Laurita.

As you know through my blogs and my writings, I have a very vocal opinion and I’m not afraid to express it. Let’s just say, it goes back to college, through law school, and my career as a TPA attorney and attorney for a semi-reputable Long Island law firm. Speaking up when you see something wrong is something I’ve done on a few occasions and let’s face it, it’s far easier to say nothing and look the other way. There is a high price to pay for saying or doing the right thing. That is price you have to pay and accept for being vocal.

I empathize with people who have the courage to speak up when they see something wrong, whether they suffer for it or not.

Through LinkedIn, I know Mark Mensack, who is a financial advisor in the Philadelphia area. About a year or so ago, he gave me a call and told me of his problems working at Morgan Stanley (MS). He had told me that after accepting a generous bonus to join MS, he discovered that MS was taking hidden fees on the 401(k) plans they managed, at the expense of plan participants. He left MS, he claims he was forced out for his outspokenness.

Mensack lost an arbitration with the Financial Industry Regulatory Authority (FINRA) and was forced to repay MS more than $1 million (the bonus plus interest and legal fees). Mensack is now in personal bankruptcy and will likely lose his home.

The issue for me here is not whether Mensack or MS is in the right, I think that issue is for appeal. And that’s the problem.

The problem is that FINRA is required to make a recording of all their hearings including this arbitration. Yet when Mensack’s attorney asked for the recordings for his appeal, FINRA refused. Apparently, FINRA is missing 8 hours of the 18 hours of recorded testimony. So about 45% of the required recorded testimony is missing. It was nice for FINRA to send Mensack an apology where the FINRA regional director stated: “I apologize for this and any perceived miscommunications from the FINRA staff about the status of the recordings. …I understand Mr. Mensack’s disappointment with the arbitrator’s decision. However, FINRA has no authority to reverse the award.” At least he has that.

When FINRA is supposed to record all of their hearings and the fact that portions of the recording are missing is highly suspicious. Loads of conspiracy theories can start from there and FINRA doesn’t have the sterling reputation as an investigative body.

Again, whether the allegations against MS are true or not are irrelevant. The fact that Mr. Mensack is entitled to a fair arbitration and an arbitration that is fully recorded and memorialized (as required by FINRA’s rules) to preserve his right to an appeal.

We are a country of laws and not of men or women. We are a country that believes in a fair system of due process and any misdeeds or mistakes that negatively affect due process needs to be expunged.  The FINRA arbitration decision must be vacated because FINRA’s “error” will certainly doom Mensack’s appeal.

For a full article on this case, click below:


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