Friday, January 28, 2011

Slaying Goliath?: Reversal of Arbitration Confidentiality Order

James Dever never imagined his efforts would overturn a gag order imposed upon private arbitration proceedings. In the midst of a long, successful career with Oppenhemier he was forced to resign for apparently unwarranted reasons centering around his involvement in the investigation of a subordinate’s dishonest and unethical business practices with an elderly couple. The subordinate, Stephen Toussaint, was sentenced to four years in prison, whereas, Dever was asked to step down from his branch manager role by the Chief Executive of Oppenheimer and told to be gone in six months, allegedly claiming pressure from the State of Massachusetts.

Common place in the financial industry is the confidentiality given to both financial institutions and customers regarding any arbitration proceedings. Arbitration agreements are standard, but some do more harm to individuals than the very benefit they were intended to provide. Dever encountered this very issue as the confidentially order regarding his investigation of Toussaint’s unethical business practices and other various documents did more harm than good. His name was damaged in the financial sector, causing him great financial stress. Dever fought to reverse the confidentiality order in an effort to clear his name and bring this matter to the public's eye.

Despite strong objections from Oppenheimer arguing attorney-client privileges and customer privacy laws, Judge McIntyre ruled that “the public’s interest in transparency trumps a financial institution’s interest in concealing its dealings with employees, regulatory agencies, and their lawyers.” In the wake of this substantial ruling, we can attest to the need for more transparency within the financial industry. We may see others challenge long-stood assumptions regarding blanket privacy provisions for arbitrations. Letting some sun light in may benefit both customers and the "honest majority" within the financial sector.

For a more detailed review of this case, one may wish to review the articles written by Boston Globe reporter Beth Healy.

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