In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in April 2011, Claimants asserted causes of action for:

• raiding,
• breach of contract,
• breach of duty and loyalty,
• aiding and abetting breaches of duty of loyalty,
• unfair competition,
• breach of fiduciary duty,
• misappropriation of trade secret,
• tortious interference with contract,
• tortious interference with prospective economic relationships, and
• violation of FINRA Rules of Conduct.

Claimants sought four categories of compensatory damages for:

1. the loss of gross revenue from 9 brokers for the 3-5 years it will take to rebuild the Repo desk;
2. recoupment of the salary,bonus, and other compensation paid to Palladino and the Repo Respondents;
3. additional compensation that was paid to remaining Tullett brokers to counter the Repo raid; and
4. compensation that will be paid to recruit and hire brokers to replace the brokers poached during the Repo raid

Morgan Stanley Wins Unfair Competition And Raiding Case Against Robert W. BairdBill SingerContributor

Janney Montgomery Scott Wins $2.4 Million Raiding CaseBill SingerContributor

Brokerage Firm Goes All In But Loses High Stakes Employment Arbitration Poker GameBill SingerContributor

Wachovia Somewhat Stiffed by Stifel Nicholas In $7 Million Raiding CaseBill SingerContributor

In the Matter of the FINRA Arbitration Between Tullett Prebon Financial Services LLC and Tullett Prebon Americas Corp., Claimants, vs. BGC Financial, L.P., Michael Palladino, Anthony S. Arcabascio, Richard Lester Clarkson, Charles Michael Comparetto, Gregory James Golden, Timothy Michael Horan, Thomas Edward Killeen, Pierce James Ryan, and Robert Andrew Steiniger,Respondents (FINRA Arbitration 11-01413, January 11, 2013).

At the hearing, Claimants requested compensatory damages in the amount of $16,312,855.00, and sought exemplary damages for the allegedly willful and malicious acts by Respondent BGC, plus costs, expenses, interest, and attorneys’ fee. Also, Claimants sought a permanent injunction against:

• BGC: restraining them from any further solicitation or hiring of Tullett’s contract or other employees;
• Palladino and the Repo Respondents: restraining them from any further solicitation of Tullett’s contract or other employees and/or customers, or other violations of their pre- or post-employment covenants.

Finally, Claimants asked that all Respondents be referred to the enforcement divisions of FINRA or the SEC for appropriate actions

Respondents’ Side Of Things

Respondents generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim in which the employee respondents asserted causes of action for:

• breach of contract,
• violation of New York Labor Law,
• right to unpaid commissions,
• right to unpaid expenses, and
• violation of FINRA Rule of Conduct 2010.

Decision

The FINRA Arbitration Panel denied Claimants’ claim and found Claimants liable and ordered them to pay to Respondents the following compensatory damages:

• Palladino : $231,510.51.
• Arcabascio : $9,632.70.
• Clarkson : $27,099.30.
• Comparetto : $794.14.
• Golden : $13,487.82.
• Horan : $5,422.30.
• Killeen : $38,488.40.
• Ryan $20,088.55.
• Steiniger : $21,407.22.

Bill Singer‘s Comment

When you demand over $16 million in damages arising from the alleged wrongful raiding of your firm, you’d sort of think that the Claimants would come to the hearings with some cannon balls rather than mere powder and wadding.  From the terse dismissal by the FINRA arbitrators, it doesn’t seem that Claimants had much of a broadside. On the other hand, Respondents’ boarding party seems to have taken the enemy.

Wall Street‘s landscape has always been filled with contentious disputes between and among the likes of Tullet Prebon and BGC Financial — and the pugilistics often involve such combatants as Merrill Lynch, JP Morgan, UBS, Morgan Stanley,  Wells Fargo, and many other names no longer with us, merged into the ranks of competitors, or still hanging in there. Firms come and go but among the constants in the biz are the impetus to cannibalize business; to engage in hardball tactics to jam up those who get in your way; and to pull out all the stops, legal or otherwise, compliant or otherwise, ethical or otherwise.

It’s a tough Street. Always has been. Always will be. Not the pavement for the faint of heart.

READ “Street Sweeper” columns on raiding, unfair competition, and the Protocol:

• Morgan Stanley Wins Unfair Competition And Raiding Case Against Robert W. Baird
• Janney Montgomery Scott Wins $2.4 Million Raiding Case
• Morgan Stanley Smith Barney Eviscerated In Fidelity Unfair Competition Case
• Wachovia Somewhat Stiffed by Stifel Nicholas In $7 Million Raiding Case
• Former Morgan Stanley Smith Barney Brokers Lose $4 Million Protocol Arbitration
• FINRA Arbitrators Enjoin Brokerage Raid And Enforce Non-Compete
• Wall Street Raiding Case Ends With Odd Twist
• Arbitrators Say Deutsche Bank Securities Managing Director’s Conduct Was Reprehensible