According to FINRA, UnionBanc Investment Services, LLC was censured and fined $75,000 for failing to comply with discovery obligations in a FINRA arbitration proceeding brought by a former registered representative.

The case arose from an arbitration claim filed by a former representative regarding his termination from the firm. When the claimant served a request for production of documents seeking emails related to his termination, the firm's initial response provided only 11 pages of email. After the claimant moved to compel additional production, the arbitrator ordered the firm to supplement its response. This resulted in the production of thousands of additional responsive emails—a stark contrast to the initial 11 pages.

However, the firm then excessively redacted a significant portion of these emails based on improper privilege assertions. The arbitrator ordered the firm to remove most redactions and revise its privilege log, but the firm failed to comply. Ultimately, the arbitration panel issued a third order directing removal of redactions and found that the firm created unwarranted impediments to discovery in violation of the arbitration forum rules. The panel awarded the claimant sanctions and attorney fees of $35,000, which the firm paid. Notably, the claimant's substantive claims were ultimately denied after the hearing.

This case serves as an important reminder that firms participating in FINRA arbitration must take their discovery obligations seriously. Creating impediments to discovery not only results in sanctions but undermines the integrity of the dispute resolution process. For investors and registered representatives involved in arbitration, this decision reinforces that arbitration panels will enforce discovery rules and sanction parties who fail to comply in good faith.