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

Citigroup is Dunne-in By FINRA Arbitration Loss
Written: May 7, 2010

As a result of the termination of employment of several employees and their subsequent employment with Convergent Wealth Advisors, LLC,  former employer Citigroup Global Markets, Inc. d/b/a Smith Barney (CGMI) filed a FINRA Arbitration Statement of Claim on September 4, 2008, which asserted claims against a number of Respondents for

  • Breach of Contract
  • Conversion/Fraud;
  • Breach of Fiduciary Duty;
  • Misappropriation of Trade Secrets;
  • Intentional Interference with Business Relationships;
  • Unfair Competition;
  • Civil Conspiracy; and
  • Raiding.

Claimant CGMI requested an Order from the FINRA Arbitration Panel:

  • Enjoining Respondents, for a period of one year following their termination, from soliciting Claimant’s customers or initiating contact with Claimant’s customers for the purpose of getting the customer to transfer their account, to open a new account with CWA, or otherwise to discontinue their relationship with Claimant;
  • Requiring Respondents to return all of Claimant’s records;
  • Requiring Respondents to remove all of Claimant’s proprietary and confidential information from their computers;
  • Precluding Respondetns from soliciting any of Claimant’s employees or customers;
  • Permitting Claimant to inspect Respondents’ computers to ensure no proprietary and/or confidential information remains on Respondents’ computers.

Further, Claimant sought compensatory damages, attorneys’ fees, costs, and a referral of the Respondents by the FINRA Arbitration Panel to FINRA for disciplinary actions, and any other relief that the Panel deemed appropriate.

 

In the Matter of the Arbitration Between Citigroup Global Markets, Inc. d/b/a Smith Barney, Claimant, versus Peter F. Dunne, George A. Dunn, Lori Van Dusen, David Mattia, Bruce Wall, Winship Rose, Richard Vankuren, Jeffrey Wagner, Thomas Hawks, Jeffrey Santos, James Henson, Douglas Smith, and Convergent Wealth Advisors, LLC, Respondents (FINRA Arbitration 08-03123, April 30, 2010).

 

The Respondents Weigh In

 

Respondents generally denied the allegations and asserted various affirmative defenses.

 

Respondents Dunne, Dunn, Wall, Ross, Santos, and Smith filed a Counterclaim asserting:

  • Tortious Interference with Economic Relations;
  • Unfair Competition;
  • Failure to Comply with the Protocol for Broker Recruiting; and
  • Failure to Comply with FINRA’s Rules 

Respondents Dusen, Mattia, Vankuren, Wagner and Hawks filed a Counterclaim asserting:

  • Tortious Interference with Economic Relations;
  • Unfair Competition;
  • Defamation;
  • Injurious Falsehood;
  • Failure to Comply with the Protocol for Broker Recruiting; and
  • Failure to Comply with FINRA’s Rules 

Respondents sought attorneys’ fees, costs, and other equitable relief.  Moreover, in furtherance of their Counterclaims, Respondents sought

  • Complete account information for all of Respondents/ current clients who were formerly clients of Claimant;
  • Compensatory damages;
  • Punitive damages;
  • Attorneys' fees;
  • Costs;
  • a referral of the Claimant by the FINRA Arbitration Panel to FINRA for disciplinary actions 

Claimant CGMI generally denied the Counterclaims’ allegations and asserted various affirmative defenses.

 

The Preliminaries

 

Respondent CWA is not a FINRA member and did not voluntarily submit to arbitration; and, as a consequence, the Panel made no determination with respect to claims against CWA.

 

In June 2009, Claimant filed a Notice of Dismissal of Respondent James Henson.

 

In September 2009, the FINRA Arbitration Panel granted Claimant’s Motion for Additional Time to submit discovery materials subject to a $10,000 sanction payable to Respondents for Claimant’s discovery failure.  Throughout this proceeding, the Panel dismissed five of Respondents’ Motions to Dismiss based upon allegations that Claimant had intentionally and materially failed to comply with the Panel’s discovery order.

 

The Decision

 

The FINRA Panel dismissed all claims and requests with prejudice. 

 

Bill Singer's Comment: Thirteen, count 'em, 13 Respondents!  And what does Claimant CGMI have to show for all its hardball?  Well, some 20 months after Claimant CGMI filed its Statement of Claim, the FINRA Panel essentially gave the firm a cockeyed look as if to say "What the hell are you talking about?"  Although all claims of all parties were dismissed, this was clearly a big black eye of a loss of Citigroup/Smith Barney.

 

As I have often said about these "send 'em a message" cases, very often the message gets lost in the mail.  Large firms such as Citigroup can afford the financial costs of playing hardball with these types of employee disputes.  The theory is that the employer needs to demand its terms for settlement or go to the mat at a hearing.  Assuming you buy the logic, the benefit of such a strategy is that the word gets out that you either pony up the settlement bucks or you could get crushed at a hearing (both in terms of compensatory damages, interest, their attorneys' fee, and all the other greater and lesser pains of such stress).

 

As a strategy -- as a theory -- that's great.  The only problem is that a firm such as CGMI has this one major Achille's Heel: It can't afford to lose a single arbitration.  When CGMI loses a case, such as this one, it becomes part of the lore of Wall Street.  Which means that brokers gather round the water coolers, at the bar on Friday afternoon, and on the online forums and talk about how so-and-so spit in CGMI's face and got away with it -- and if I ever decide to leave, I'm not taking any crap from them either!  


 
[^top^]

Previous Entries
April 19, 2014
Will This Tax Season Lien On You?April 18, 2014We just made it through another tax season. The good news is that you filed and are fully paid up -- or... Read On
April 18, 2014
We just made it through another tax season. The good news is that you filed and are fully paid up -- or, the bad news is that you didn't file or you h... Read On
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
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 Tax Liens 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+