Employees cut loose when their firms came under government scrutiny are turning the tables by filing arbitration claims. They're winning, too.
According to the Financial Times, Merrill Lynch, AllianceBernstein and Wachovia Securities have had to pay claims to six former employees who were fired during the recent market-timing scandal. The six claimed they were made scapegoats for the firms' improper behavior.
In today's post-Enron environment, financial companies are eager to show regulators they're committed to, in the FT's words, "rooting out bad behaviour."
Unfortunately for the firms, arbitrators aren't regulators. Notes the FT:
Unlike courts which must apply particular laws to a case, arbitrators base decisions on a sense of fairness and have proved to be sympathetic to employees' claims that supervisors were aware of and generally approved of the market-timing.
"The firms knew everything these people were doing, welcomed it, husbanded it, gave it awards, and then, when the regulators got hot and heavy, threw them under the bus," said David Weschler, the attorney for three former Merrill Lynch brokers whose $14m arbitration award was upheld by a federal court in late March.