Ruling in FINRA Related Arbitration Raises Confusion

Judge Raffi N. Yessayan
Judge Raffi N. Yessayan

A ruling by a Massachusetts Superior Court Judge shows how murky the exact legal standing of FINRA, the Financial Industry Regulatory Authority, is.

The ruling was made by Judge Raffi N. Yessayan who “is an associate justice for the Massachusetts Superior Courts. He was nominated to the court by former Governor Deval Patrick (D) in September 2014, and his nomination was confirmed by the Governor’s Council in November 2014.” According to the website, Ballotpedia.

“FINRA in effect acts as a quasi-governmental entity when conducting arbitrations pursuant to its delegated authority,” Yessayan wrote. “Accordingly, although FINRA is a private organization and not a government agency, this Court concludes that a FINRA arbitration qualifies as a ‘governmental proceeding.’”

FINRA is a self-regulatory organization which often puts it into a netherworld of whether it is a public or private entity.

James Murtagh is a doctor and whistleblower who dealt with JCOHA, now known as Joint Commission but then known as the Joint Commission on Hospital Accreditation which was also structured similarly, and he noted that Joint Commission “is public when it wants and private when it wants.”

Indeed, Judge Yessayan straddled the line saying that “although FINRA is a private organization” the FINRA arbitration “qualifies as a ‘governmental proceeding.’”


Anti-SLAPP or Strategic Lawsuits Against Public Participation, are laws, currently on the state level in the US, which are effective deterrents against frivolous lawsuits brought to shut down a critic of the plaintiff.

While they apply to the broad spectrum of lawsuits, the trading industry has its fair share of situations where anti-SLAPP might apply.

As of January 2018, 28 of the 50 US States had anti-SLAPP statutes.

In the case, a man named James Dever worked as a manager at a broker/dealer called Moors and Cabot M&C in Boston, Massachusetts.

He turned in a colleague who was violating industry rules by introducing certain penny stock to a client. Rather than investigating the perpetrator, Aaron Foley, M&C terminated Dever.

Dever alleged all sorts of retaliatory actions starting with his termination.

Dever alleged that before an arbitration hearing Foley’s lawyer suggested that if he dropped his wrongful termination suit they would not pursue criminal charges, according to a story in the Massachusetts Lawyer, which also covered the case.

“In July 2012, while the arbitration was still pending, attorney David Ward of the defendant law firm accused the plaintiff of making threatening phone calls to Joyce and Foley.” Massachusetts Lawyer also noted. “Around the same time, M&C and Foley made reports to Boston police concerning alleged threats made by the plaintiff. Meanwhile, Joyce and an M&C branch manager obtained harassment prevention orders against the plaintiff in Boston Municipal Court.

“After reporting to Hanover police that Dever had made a similar threat to him, Foley sought a ‘no harassment’ order in Hingham District Court. Represented by Rabinovitz, Foley also filed an application for a criminal complaint against the plaintiff. The Hingham District Court declined to issue a criminal complaint.”

Though it appears as though Dever would be the beneficiary of an anti-SLAPP suit, the suit was effectively dismissed as of now by Yessayan because the circuit court found Dever’s lawsuit to be a SLAPP suit.