August 2, 2017
In a recent FINRA intra-industry arbitration, we get to see the unraveling of a particularly ugly mess of an employment dispute pitting a member firm against a former employee and his new shop. Among the more colorful allegations is that the former firm engaged in "blackballing" its former employee.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2016, Claimant Tullett Prebon Financial Services LLC asserted breaches of contract, implied covenant of good faith and fair dealing, and loyalty; tortious interference with contract and prospective economic relationship; and aiding and abetting breach of contract and duty of loyalty. Claimant sought compensatory, consequential, liquidated, and punitive damages; interest, attorneys's fees, and costs. In the Matter of the FINRA Arbitration Between Tullett Prebon Financial Services LLC, Claimant, vs. Bay Crest Partners, LLC and Andrew Robert Arnold, Respondents (FINRA Arbitration 16-01209, July 19, 2017).
Respondents Bay Crest Partners and Andrew Robert Arnold generally denied the allegations and asserted various affirmative defenses. Arnold filed a Counterclaim asserting fraudulent misrepresentation; negligent misrepresentation; violation of the New Jersey Anti-Trust Act; conversion; and unfair competition. As set forth in the FINRA Arbitration Decision, Counterclaimant Arnold sought an:
award enjoining and restraining Claimant, its successors, assigns, subsidiaries and transferees, and their officers, directors, agents, employees, and all other persons acting in concert with them, from engaging in the unlawful practices described in this Counterclaim and from engaging in any similar unlawful practices; enjoining and restraining Claimant, from all future "blackballing' activities, including writing false and defamatory letters to Arnold's employer, refusing to release his 401K monies, or engaging in other activities with the intention of preventing Arnold from working in the industry or retaining his customers; compensatory, incidental and consequential damages; pre-judgment and post-judgment interest; punitive damages; and such other and further relief as the Panel may deem just and proper.
The FINRA Arbitration Panel found Respondent Bay Crest Partners liable to and ordered it to pay to Claimant Tullet Prebon $192,798.00 in compensatory damages. Respondent Arnold is liable liable to and ordered him to pay to Claimant Tullet Prebon $1,207,565.00 in compensatory damages plus $565,000 in attorneys' fees.
Bill Singer's Comment
[Sigh -- he says in a stage whisper]
When I lament the lack of "content and context" in FINRA Arbitration Decisions, this is a classic example. I mean, c'mon now, fess up, you too would love to know just what the hell went on here, right? Unfortunately, FINRA arbitration being what it is, a lot of what leads up to a lawsuit and a lot of what went on during the hearings is buried among the confidentiality that attaches to the resolution of such disputes within the context of a private arbitration.
As such, we don't know why Arnold left (or was pushed out of) Tullet Prebon. We don't know if there was a non-compete and/or non-solicit provision in Arnold's employment agreements. We are titillated by allegations of "defamatory letters to Arnold's employer," but provided with nary a word that may have found its way into said correspondence. We don't even know whether Arnold ever got his 401(k) funds or why the funds were retained by Tullet Prebon. About the only thing that we know is the arbitrators slammed Respondent Arnold with just shy of $1.8 million in damages and fees, and hit Bay Crest Partners with about $193,000 in additional damages. We're looking at just shy of $2 million in awards without having a clue as to what happened to prompt the lawsuit or how the arbitrators calculated the dollars in damages.
Online FINRA BrokerCheck records as of August 3, 2017, disclose that Arnold was registered with Tullett Prebon from May 2011 to August 2016.