In a FINRA Arbitration Statement of Claim filed in March 2009, James Alan Tekavec alleged that Frank Patrick Cunnane breached their partnership agreement and misrepresented to Tekavec that their partnership of continued commission sharing would continue once the parties moved to FiNet, an independent broker-dealer division of Wachovia Securities. In the Matter of James Alan Tekavec, Claimant, versus Frank Patrick Cunnane and Wachovia Securities, LLC, Respondents (FINRA Arbitration #09-01561, August 12, 2010).
Claimant Tekavec alleged that shortly after he and Respondent Cunnane registered with FiNet, Cunnane presented an employment agreement, which offered an untenable position of taking a substantial pay cut. Claimant further alleged that Respondent Wachovia tortiously interfered and aided Respondent Cunnane when the firm denied Claimant his rights in the partnership. Tekavec alleged that Wachovia further injured him when the firm refused to reinstate him in his former position. Claimant asserted breaches of contract, fiduciary duty, and partnership agreement, and sought $2,158,604.13 in compensatory damages plus costs and attorneys' fees.
Not the Way That I Recall It
Respondents Wachovia and Cunnane generally denied the allegations. Respondent Cunnane specifically asserted that Claimant Tekavec was not led by Cunnane to believe that he would be entitled to share income 50/50 with Cunnane, or that he had some ad infinitum partnership relation. Respondent Cunnane categorically asserted that there was no partnership agreement, no contract or breach of contract, no fiduciary duty, and no misrepresentation of facts; and, accordingly, that Claimant had no legal basis for any claimed damages.
In a Counterclaim, Cunnane claimed that Tekavec was unjustly enriched at the expense of Cunnane in connection with payments made by Cunnane when Tekavec was unable to work. Cunnane alleged that Tekavec knowingly made false and malicious claims designed to wreck the integrity and professional reputation of Cunnane. Cunnane sought $778,373.00 in compensatory damages.
At the End of the Day
In July 2010, Claimant dismissed his claims against Respondent Wachovia.
The FINRA Panel found Respondent Cunnane liable and ordered him to pay $387,398.86 plus 6% interest until paid. Cunnane's Counterclaim was dismissed.
Bill Singer's Comment: Among the more common complaints that I hear in my law practice is that a registered representative was "promised" the world by a new broker-dealer (or wannabe joint production partner) and everything was all lovey-dovey -- that is, up until such time as all the accounts transferred to the new firm or team. Suddenly, once the assets are moved and the bridges back are all burned, some nasty things pop up.
The supposed oral promises get modified -- you know what? Ummm . . . we're not going to be able to do that for at least another six months, and we're not going to pay for that additional sales assistant, and your corner office may not be ready for a year, and compliance will not approve your future sales of this product that constituted 60% of your income, and we're changing the pay-out grid and it's going to increase your qualifying threshold and reduce your percentages, and . . .well, if you're in the biz, then I'm sure you know the sob stories. Of course, the worst of all is the strong-arm tactic of your being told that you must sign this revised agreement immediately or all bets are off and the firm may terminate your registration.
What's the best way to avoid such a mess? Clearly, get everything, and I mean everything, in writing before you start. Make sure that your lawyer has included a provision that future revisions to your written agreement may only be in a writing signed by both parties. Further, there are no handshakes or understandings that are worth squat. The guy who swears to you on a stack of bibles that his word is golden could be kicked to the curb tomorrow, and the firm may well deny that it was aware of his promises to you. Get it in writing. Your future joint-production partner may be honorable and may fully intend to keep his word when it comes to his retirement and the divvying up of the joint accounts, but he could drop dead tomorrow and his widow and your firm may have a different agenda in mind. Get it in writing.
For some additional guidance, please read this 2007 article that I authored for Registered Rep. Magazine: "The Dreaded D's: Death, Disability, Disqualification, and Divorce" at http://registeredrep.com/advisorland/career/finance_dreaded_ds/
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