Northwestern Mutual Investment Services (NMIS) has been fined $8 million by a Financial Industry Regulatory Authority panel in a wrongful termination suit filed by three former brokers.

The Finra arbitration panel ruling, filed yesterday, awarded compensatory damages of $3.2 million for Robert Bruce Galbreath Sr., $2.6 million for William Thomas Galbreath and $2.2 million for Michael E. Resch.

"We are surprised by the arbitration panel's decision," a Northwester Mutual spokesperson said, "both as to the finding of liability and the amount of damages awarded to those former financial representatives."

The three brokers had initially asked for a total of $35 million in compensatory damages for defamation, wrongful termination and conversion after Milwaukee-headquartered NMIS fired them on Aug. 11, 2020. According to BrokerCheck, the company stated the reps were discharged after the firm discovered they had engaged in undisclosed or unapproved consulting.

The brokers disputed that claim, saying their activities did not involve the sale of securities and no Finra, industry or company rules had been violated. In addition, the brokers claimed that their outside activities had been pre-approved and that they had disclosed all of their activities in real time, said their attorney, Mark Seldin Rosen, of Sparks, Md.

"Ultimately, NMIS had accused my clients in the U5 of not having permission to do the 'outside business activities' consulting and claimed they needed separate approval for this piece of consulting," Rosen said. "And they also accused them in the U5 of failing to cooperate in the investigation, which might have been the worst thing of all. None of that was true, and we proved it."

All three brokers had worked in the Abington, Pa., office of the investment arm of Northwestern Mutual between five and 14 years, and all three currently work at J. Alden Associates in Wayne, Pa., according to BrokerCheck.

In addition to the monetary award, Northwestern Mutual was instructed to change the explanation for termination to “The company elected to end the at-will employee’s contract.” That decision was based on the “defamatory nature of the information” in the original explanation, the award letter said.

The three had also named Anthony Robert Stanley, a managing partner in the Philadelphia office, as a respondent in the arbitration, but the Finra panel denied any claims against him.