Fired HSBC Managing Director Sues Over ‘False’ Finra Form

(Bloomberg) -- A fired HSBC Holdings Plc private banking managing director is suing to expunge a Financial Industry Regulatory Authority form that he says gives a “false” reason for his termination, putting his reputation at risk.

Adam Gross, who headed HSBC’s U.S. investment services and product solutions group, filed a complaint in federal court in Manhattan on Thursday after Finra declined to strike from public records the form HSBC originally submitted to the body stating he was fired for improperly communicating with a prospective client about a third-party fund.

Gross had previously struck a deal with HSBC over his claim that he was fired in retaliation for objecting to allegedly illegal conduct at the bank. As part of that agreement, HSBC didn’t challenge Gross’s version of event at a hearing before a Finra panel. Even so, the regulatory body in September declined to wipe his Form U-5, according to the complaint.

“Finra’s decision has badly damaged Mr. Gross’ professional career by allowing a false and defamatory reason for termination to remain on Mr. Gross’ U-5,” he said in his lawsuit. Gross was also previously a managing director at Citigroup and JPMorgan Chase.

Arbitration Agreement

Gross sued HSBC under a provision of the Federal Arbitration Act authorizing courts to enforce arbitration agreements, asking for an order compelling Finra to expunge his U-5. His lawyer, Daniel Kaiser, said Finra was not named as a defendant because the suit was essentially an appeal of the regulatory body’s ruling.

HSBC declined to comment on the suit.

“Arbitration awards are rendered by independent arbitrators chosen by the parties, and Finra does not comment on them,” Ray Pellecchia, a spokesman for the body, said in a statement.

In his lawsuit, Gross said his lawyer submitted a letter to HSBC shortly after he was fired in September 2020 claiming he had been the subject of retaliation because “he objected to unlawful conduct that constituted investor fraud and federal securities law violations.” He said he subsequently reached a financial settlement with HSBC and that the bank agreed not to oppose his application to have his U-5 expunged.

‘Questionable Practices’

In a February 2021 filing submitted to Finra, Gross said he raised concerns with both the bank’s management and legal team in 2018 and 2019 about “questionable business practices relating to the payment of commissions.” He said his objections were “dismissed out of hand.”

Gross detailed the circumstances of his termination in the Finra filing. HSBC had claimed he used WeChat, an unauthorized platform, to communicate with a prospective client and recommended she look at a fund not carried by the bank. Gross said the woman was a friend of a prospective client but not one herself, so his communications didn’t violate HSBC policy. 

He also complained of facing gender discrimination as a man at HSBC, noting the bank reduced his bonus by 40% after a female staffer complained that he made her “feel uncomfortable.” Gross claimed that he himself had reported a female colleague who said one of his subordinates “dressed like a prostitute” but that no action had been taken against the woman. 

The case is Gross v. HSBC, 21-cv-08636, U.S. District Court, Southern District of New York (Manhattan).

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