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Brokerage Firm Goes All In But Loses High Stakes Employment Arbitration Poker Game
Written: May 23, 2012

LAS VEGAS, NV - DECEMBER 18: Commissioner of t...

This FINRA employment arbitration looked a lot like a game of high stakes poker

In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in August 2010, the asserted that Respondent Reuven Enterprises Securities Division had failed to reimburse their 2010 state registration fees. In the Matter of the FINRA Arbitration Between Gaurav Lall, Tamir Shabat, Danny Z. Spiegel, Claimants vs. Reuven Enterprises Securities Division, LLC, Respondent, vs. Synergy Investment Group, LLC, Third-Party Respondent(FINRA Arbitration 10-03660, May 21, 2012).

Respondent Reuven Enterprises generally denied the allegation and asserted various affirmative defenses. Also, Respondent filed a Counterclaim and a Third-Party Claim against Third-Party Respondent Synergy, both claims alleging:

  • raiding,
  • unfair business competition,
  • loss of business,
  • defamation,
  • loss of revenues,
  • breach of confidentiality and intellectual property,
  • misappropriation, and
  • breach of contract.

Okay — so it’s gonna be one of those.  So much for the lecture about a clean fight, shake hands, and the like.  This is gonna be ugly, one way or the other.

See Ya And Raise Ya

Things likely went from bad to worse because Claimants’ initial request for compensatory damages was a measly $5,687.00.

In its Counterclaim and Third-Party Claim, Respondent requested compensatory damages in the amount of $11,085,000.00, unspecified punitive damages, reasonable legal expenses, administrative expenses, travel expenses, and regulatory fees associated with the filing of any of these claims.

Yup – I’ll see you and go all in. We got about five thousand Bid versus eleven million Ask. Quite the spread!

By the close of the hearing, Respondent reduced its multi-million damage claim to a mere $577,000 to $5,400,000.00 range.  I’m not quite sure how you have a range of about half a million bucks to some ten times that amount but, hey, more the merrier, I guess.

In its Answer to the Third-Party Claim, Third-Party Respondent Synergy sought an expungement of the matter and an award of $150,000 in attorneys’ fees. By the close of the hearing, Synergy graciously reduced that attorneys’ fee request to $50,000.00 (Claimants joined in on that fee request during the hearing). During the hearing, Synergy did not pursue the expungement claim and the FINRA Arbitration Panel denied the request without prejudice.

At the hearing, Claimants and Synergy requested an award of punitive damages in an amount to be determined by the Panel.

Let’s Not Get This Party Started

Yaron “Ron” Reuven was not named by Claimants as a Respondent; however, they sought to name him in their Answer to the Counterclaim and Synergy attempted to follow along in its Answer to the Third-Party Claim. Notwithstanding, Yaron “Ron” Reuven did not sign a Submission Agreement or file a pleading on his own behalf .  Ultimately, the FINRA Arbitration Panel determined that Yaron “Ron” Reuven was not a party to this arbitration.


The FINRA ArbitrationPanel found Respondent Reuven Enterprises liable and ordered it to pay to:

Claimant Lall: $2,143.00 in compensatory damages;

Claimant Spiegel: $1,376.00 in compensatory damages; and

Claimant Shabat: $2,168.00 in compensatory damages. 

Additionally, Respondent Reuven Enterprises was ordered to pay to Claimants and Synergy $50,000 in joint attorneys’ fees.

Finally, the Panel ordered Reuven Enterprises to pay to Claimants and Synergy Investment $100,000 in punitive damages because Respondent

  • brought a  frivolous Counterclaim and Third-Party;
  • failed to maintain discovery evidence;  and
  • deleted relevant computer records.

Bill Singer’s Comment

These things happen.  Former employees and their former employer have a falling out.  In this case, it appears, among other things, to have taken the form of a dispute over the reimbursement of state registration fees.  However, that’s just in this case.  In other industry disputes, you name it and it becomes the basis for litigationAs I have detailed in many “Street Sweeper” columns, this crap happens all over: Merrill Lynch, Morgan Stanley,UBS, Wells Fargo — pick the firm and there are employment disputes.

Given that Wall Street is supposedly about money — big money — and about mature professionals entrusted with handling those funds, you would hope that reasonable men and women would generally find a way to sort through these often piddling disputes.  But they don’t.  And as an attorney who makes a living handling these things, who am I to complain?

The mystifying aspect of today’s column is that Claimants were seeking a lousy $5,000.  In response to that demand, the former employer comes back with an $11 million dollar damages claim.  I mean, seriously?  C’mon guys, with all due respect, if you had sustained such damages then why didn’t you beat your former employees to the arbitration forum and file first?  Yeah, sure, I bet that I can guess: It was about the principle.  Uh, huh.  Well, congratulations!  You managed to stand on your principle and that apparently turned the $5,000 claim into an award of about $155,000.  So — the value of your principle was about $150,000.


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