David Cray knows the perils of whistle-blowing. More than three years ago, Cray, then an associate vice president at NationsSecurities in Florida, warned his bosses in writing about what he thought were serious problems at the firm. Among other things, Cray alleged investors were being misled about the safety of investments they were buying. After the firm first promised to investigate, Cray said he was transferred to another office, told to turn over his keys and not to come back.

Cray filed suit in 1994 claiming NationsSecurities, a division of NationsBank of Charlotte, N.C., had broken Florida's Whistleblower Act law that protects employees who report suspected problems.

In their arbitration claim, Cray and two other former NationsSecurities employees asked for $20 million each in actual damages, $500 million in punitive damages plus attorney fees and other costs.

After 65 arbitration sessions in Tampa, Fla., an NASDR arbitration panel in May ruled NationsSecurities broke Florida's whistle-blower protection law not for firing Cray but for demanding "that Cray surrender his keys to his assigned workplace."

In an unusually detailed ruling, the panel decided NationsSecurities did not take any "punitive or retaliatory action" against Cray or the firm's two other former employees--other than to ask for Cray's keys.

"The evidence does not support [Cray's] claim that he was actually or constructively discharged" and "therefore his claim for damages as a result of this alleged discharge is denied," the panel's decision states.

Cray's CRD states Cray was terminated from NationsSecurities on June 24, 1994--11 days after the date on the letter he sent to his superiors, a copy of which Cray provided this magazine.

The panel did not explain the timing of Cray's termination, or how being asked for one's office keys could not be considered a discharge. In the case summary, the panel says: "In view of the possible confusion of Cray as to his employment status, engendered by these actions [and] his unblemished and acceptable level of performance ... the panel orders [NationsSecurities] to offer Cray reinstatement to his former position" or equivalent position within 30 days.

It also inferred that Cray's business was destroyed. The three-person panel, chaired by Garry O'Donnell, a Ft. Lauderdale lawyer, ordered NationsSecurities to help Cray rebuild his "book of business." In addition, NationsSecurities was ordered to pay $97,800 in fees. The other arbitrators were Linda Oldt, a Winter Haven, Fla., financial adviser, and Barney Spurlock Jr., a retired airline industry arbitrator in Palm Coast, Fla.

As of late September, however, Cray did not have a job with NationsSecurities and both sides were still fighting.

Cray's original lawyer, Jonathan Alpert, declined comment. Cray, who runs his own investment office near Tampa, has hired a new lawyer, Michael Addison. In August, Addison filed a motion in U.S. District Court to set aside or modify the NASDR panel's ruling.

"Something went wrong and the [panel's] award does nothing but further the continued reprisals and retaliation practiced upon Cray after he reported the violations he saw in his workplace," states a memorandum supporting the motion.

Before Cray's motion can be heard, however, Judge Elizabeth Kovachevich must rule on NationsSecurities' motion to confirm the NASDR panel's award. NationsBank and its lawyers declined comment.

Cray isn't the only one who has accused NationsSecurities of misleading investors. The firm and its parent have agreed to pay $59 million to settle two class-action lawsuits by investors. In May, NationsSecurities agreed to pay $850,000 to resolve a three-year investigation by Florida securities officials. Last year, NationsSecurities offered investors their money back as part of a deal in which Texas regulators agreed to stop efforts to ban the firm from doing business there. NationsSecurities has always denied wrongdoing.

Cray's NASDR hearing panel noted that, while it could not judge alleged complaints made against Cray while he worked at NationsSecurities, "it is clear to the panel that the policies, practices and proprietary products of [NationsSecurities] were less than adequate to meet industry standards, and may have contributed to both the number and severity of customer complaints."

Cray has been high profile throughout his fight with NationsSecurities. He's been mentioned in stories in Worth magazine, Fortune, Kiplinger's and The Wall Street Journal. He claims it was after he blew the whistle on NationsSecurities that Florida, Texas and other states began investigating the firm.

"The repercussions of doing what I did and that was ethically necessary, have been personally, professionally and financially devastating," Cray now says in a prepared statement. "The panel did not provide any financial relief, and I do not know why.... An attorney has compared the panel's order with that of a judge sentencing a convicted rapist for a second date with his victim."

The NASDR would not comment on the case and would not OK release of a statement by Oldt. The other arbitrators did not return phone calls. NASDR policy does not allow arbitrators to comment on cases.