In a FINRA Arbitration Statement of Claim filed in December 2008, former Associated Person James Benjamin Fellus asserted various breaches, fraud, and other claims against his former employer Sterne, Agee & Leach, Inc. Apparently, this was one of those yes-you-did-no-we-didn't cases in which a former employee claims to have been wrongfully terminated under the terms of his employment -- and the former employer is just as adamant that the termination was with cause. Claimant Fellus ultimately requested compensatory damages in the amount of $5,945,124.00 plus interest at the rate of 6% per annum. In the Matter of the Arbitration Between James Benjamin Fellus, Claimant, vs. Sterne, Agee & Leach, Inc., Respondent (FINRA Arbitration 09-00175, November 1, 2010). Respondent generally denied the allegations and counterclaimed for $1,840,000.00 against Claimant.
The FINRA Arbitration Panel determined that the firing of Claimant Fellus was without cause as defined in Claimant's contract. Therefore, the Panel found that Respondent Sterne, Agee & Leach was liable and ordered the firm to pay to Claimant compensatory damages, including interest at the rate of 6%, in the amount of $5,695,124.00. Respondent's Counterclaim was denied in its entirety, with prejudice.
Bill Singer's Comment: I dunno about you but, wow, ain't that an impressive win? More to the point, what was Respondent thinking when it decided to go to the mat and contest this one? Someone, somewhere really miscalculated -- unless there was absolutely no give-and-take by Claimant.
James Nicholson was indicted on four felony charges, including securities fraud and investment adviser fraud, involving losses of at least $150 million. On Friday October 29, Nicholson was sentenced in Manhattan federal court by U.S. District Judge Richard J. Sullivan to 40 years in prison and three years of supervised release.
In the case of Nicholson and other scamsters, the warnings were there - years before the meltdown. The inflated financials. The bogus addresses. The suspicious transactions and attendant financial shenanigans. Sure - blame the victims for not doing their due diligence. I have no quibble with such a view. However, given the prevalence of such red flags in most of these cases, when do we also blame Wall Street's regulators for having eyes that see not and ears that hear not? Wall Street's cops have to get out from behind their desks, walk the beat, and protect the neighborhood. We need a credible first-line of defense when it comes to financial fraud - it can't always come down to a last-ditch criminal prosecution.
READ BILL SINGER'S "STREET SWEEPER" COLUMN ON FORBES.COM AT: