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FINRA Named in Whistleblower Suit

A former examiner for the Financial Industry Regulatory Authority (“FINRA”) in its New York region claims he was fired after reporting that a loophole in FINRA’s system allowed larger broker dealers to be over-leveraged.

Joseph Sciddurlo filed a whistleblower suit naming FINRA and its Chairman Richard Ketchum. Sciddurlo claims that he got high performance ratings until he uncovered a flaw that permits firms to circumvent SEC Rule 15c3-1(a)(1) regarding the maximum allowable leverage of the firm’s net capital. In a nutshell, according to Sciddurlo, a broker dealer filing under the Alternative Method of Net Capital would be able to leverage as much as it wanted.

Sciddurlo alleges that subsequent to his discovery, his employment rating was downgraded, he was denied a transfer request, placed on probation and ultimately fired, without any legitimate basis. In his complaint, Sciddurlo also alleges age discrimination. He claims that other older individuals were also fired and replaced with younger, less experienced personnel.

The complaint seeks $25 million in punitive damages for age discrimination, wrongful termination, protection as a whistleblower under the Dodd-Frank Act, and violations for New York labor law.

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