Securities America is appealing a Finra arbitration panel ruling that requires the broker-dealer to pay $95,800 in damages to a broker the company fired two years ago.

The company is arguing that the panel's ruling is invalid because it amounts to paying commissions to an unregistered broker, according to a petition filed by the company with the U.S. District Court for the Northern District of New York.

Securities America also said the panel's decision should be vacated because a Finra arbitrator in the case disclosed a conflict of interest after the arbitration hearing.

“Finra’s rules not only require disclosure, but that arbitrators swear under oath as to the accuracy of their disclosures,” the petition stated. “Securities America was deprived of the opportunity to investigate or inquire about the [arbitrator's] conflict or elect not to proceed with this arbitration panel. Accordingly, the award must be vacated.”

The appeal did not disclose details about the nature of the alleged conflict.

The Finra complaint was filed in October 2022 by Matthew Smith, who worked for Securities America from August 2018 to March 2022 as an independent contractor, according to the appeal. 

Smith claimed that he was wrongfully terminated in March 2022 and was owed commissions generated from his client relationships by his former business partners at CP Capital Management in Clifton Park, N.Y., according to the court documents.

The Finra panel held hearings on the matter in December and issued a ruling awarding Smith the compensatory damages on Dec. 26, according to the petition.

In its appeal, Securities America argues that Smith should not have been awarded the damages because he lost his broker registration when he was terminated and, therefore, was ineligible to receive commissions.

“Upon Securities America’s termination of Smith’s contract, his license to sell securities lapsed because he was no longer registered with any broker-dealer,” the company's petition stated. “Securities America could not compensate him for any commissions earned on accounts or clients within his so-called 'book of business.' Therefore, any alleged damages in withheld compensation or commissions allocated against Securities America disregarded the law.”

Smith and Securities America’s attorney could not be reached for comment. Finra spokesman Joe Atmonavage said the regulator had no comment.