An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Joint Venture Collapses Into FINRA Arbitration Slugfest Over Fee Division
Written: August 8, 2012

In a Financial Industry Regulatory Authority Arbitration Statement of Claim filed in January 2010, Claimants Jones and Wealth Rescue Strategies asserted breach of contract; breach of fiduciary duty; tortious interference with contract; tortious interference with business expectancies; conversion; slander; constructive trust; unjust enrichment; and injunction. The causes of action relate to a joint venture agreement between the parties. In the Matter of the FINRA Arbitration Between Chris Leroy Jones and Wealth Rescue Strategies, Inc., Claimants/Counter-Respondents. vs. First Texas Alliance Corporation, NuSource Financial Group, Sally Thompson, Robert Wayne Thompson, and David Brownell Wheless, Respondents/Counter-Claimants (FINRA Arbitration 10-00375, August 3, 2012).

Claimants sought at least $500,000 in damages, punitive damages, costs and fees. Claimants further asked for the imposition of a constructive trust on the funds allegedly taken by Respondents Robert Wayne Thompson and Wheless. Also, Claimants sought temporary, preliminary and permanent injunctions prohibiting Respondents from modifying the documents pertaining to the fee division between Claimants and Robert Wayne Thompson, and ordering that Respondents restore the original fee division between Respondent Robert Wayne Thompson, Claimant Jones, and Claimant Wealth Rescue.

Respondents generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim, which alleged gross misrepresentations; bad faith; and vexatious litigation.  Further, Respondents sought that at least $44,000 in damages, costs, expenses, and fees.

SIDE BAR:  While FINRA arbitrations are often fairly simple matters, they can involve complicated and often oddball facts and legal maneuvers.  Consider this quote from the FINRA Arbitration Decision:

At the conclusion of Claimants’ case, Respondent Sally Thompson made a Motion to Dismiss. The Claimants contested the motion. The Claimants’ contention with respect to Respondent Sally Thompson was that she was named only so that community property could be attached under Arizona law in the event of an award against her husband, Respondent Robert Wayne Thompson. Since this was apparently something unique under Arizona law which the Panel determined was not the law of the case, the Panel detemnined to grant Respondent Sally Thompson’s Motion to Dismiss.

Award

The FINRA Arbitration Panel found Respondent Robert Wayne Thompson solely liable to and ordered him to pay $100,000 to Claimant Jones.The Panel dismissed all claims against Respondents First Texas Alliance Corporation, NuSource Financial Group, Sally Thompson and David Brownell Wheless. Also, Claimant Wealth Rescue Strategies’ claims were dismissed.
Bill Singer‘s Comment

If you’re in the biz, you understand what this mess is about — so many joint ventures that were entered into with high hopes and good intentions crash and burn.  This was but another example.  One only needs to read the laundry list of causes of actions to take the temperature of how heated this dispute was.

When I counsel my clients on entering into such ventures, my opening points usually entail what I call the Dreaded D’s: Death, Divorce, Disability, and Disqualification. Look at each of your partners and ask what happens if he or she dies, gets divorced, becomes disabled, or is disqualified from their career.  You may be surprised at how uncomfortable the ensuing conversations can get — but these are serious issues that must be tackled before you draft any organizational documents.

The next stop on the way towards formalizing these joint ventures and team deals is to prepare a Shareholder Agreement (or similar document geared towards the legal entity used in furtherance of the undertaking) and often aBuy-Sell Agreement.  These two documents create the mechanics that will limit or prevent the sale of anyone’s ownership interest to undesirable outside parties and will set forth the path to be pursued when disputes require litigation/arbitration. Moreover, these agreements will provide for what happens if a team member is not pulling his or her weight and whether they may be deemed retired or disabled — or what is necessary to properly terminate a member.

Sadly — guess what — even with the most air tight of legal documents, things happen and you may still find yourself in litigation.  Nonetheless, the more time you spend drafting the agreements and understandings that will pave the way for your joint venture, the less likely it is that you will quickly find yourself sitting amidst ashes — not a guarantee but the odds are at least better.

 
[^top^]

Previous Entries
April 17, 2014
In this digital age there are still folks who physically cut-and-paste. How quaint. Of course, quaint or not, when you start using the terms "cut-and-... Read On
April 16, 2014
Here's an interesting cocktail of facts: an IRA, a mother, powers of attorney, and a stockbroker son. Add into that mix questions about whether a $60,... Read On
April 15, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsFor a full listing of current job openings, visit the BrokeAndBroker Employment Page ... Read On
April 14, 2014
Auction Rate Securities are the unwanted gift that keeps on giving. In today's BrokeAndBroker.com Blog, we report about yet another bit of collateral ... Read On
April 12, 2014
Citicorp Loses Bizarre Motion To Compel Class Action ArbitrationApril 11, 2014As part of the terms of his employment, former Citicorp Credit Services,... Read On
April 11, 2014
As part of the terms of his employment, former Citicorp Credit Services, Inc. employee Keith Russell had agreed to arbitrate “all employment-related d... Read On
April 10, 2014
Citigroup goes after another former employer to recover a balance on a promissory note. Nothing new here. In this case, the former registered person f... Read On
BrokeAndBroker.com Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Prison NASAA Aguilar FCPA Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Retaliation Variable Annuity Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education Impersonation Annuities BBVA Business Expenses OIP ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement employment jobs Great Recession Chase Investment Services Barclays Willful Apple Time And Price T&P Husband Letter of Authorization LOA Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Argentina Judgment Bank Fraud TSSB Trustee Frumento 6th Circuit Proctor Beneficiary NYAG Schneiderman Gallagher White Compromise Website Supervision Piwowar signature VA
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+