An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Former NFL Star Haynesworth In $30 Million Arbitration Against Citigroup And Morgan Stanley
June 20, 2013
Some say that BrokeAndBroker's Bill Singer is a raconteur because he often takes a short and not-so-sweet lawsuit and spins it into a yarn filled with twists, turns, and nuances. In this column, compare thea somewhat terse FINRA Arbitration Decision with all the edgy stuff that Bill somehow managed to dig up. And don't miss the new online video episode of "Side Bar With Bill Singer" at the end of this article.
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2011 and as amended thereafter, public customer Albert Haynesworth III alleged, among other causes, promissory estoppel, breaches of contract and fiduciary duty, and negligence in connection with respondents alleged failure to secure adequate personal liability insurance coverage for Claimant. By the close of the hearing, Claimant Haynesworth had sought $798,000.00 in compensatory damages plus treble damages pursuant to Tennessee law. Originally, Claimant sought were $7.5 million compensatory damages and $22.5 million punitive damages plus fees and costs. In the Matter of the FINRA Arbitration Between Albert Haynesworth, III, Claimant, vs Citigroup Global Markets, Inc., Morgan Stanley Smith Barney LLC, and John S. Verble, Respondents (FINRA Arbitration 11-01014, June 14, 2013 )
Respondents generally denied the allegations, asserted various affirmative defenses, and requested that this matter be expunged from the Central Registration Depository record *("CRD") of Respondent Verble.
The FINRA Arbitration Panel found Respondents CGMI and Verble jointly and severally liable and ordered them to pay $390,000 in compensatory damages to Claimant Haynesworth. Additionally, the Panel denied the requested expungement of Respondent Verble's CRD.
Bill Singer's Comment
And that, my friends, is about all that we are told concerning this arbitration in the official FINRA Decision.
Ho hum, you might say. This Haynesworth guy got just shy of $400,000 -- not too bad when the context was about an $800,000 claim . . . but maybe not all that great when compared to the initial $30 million or so in his proposed damages. Regardless, you might add, this was some fairly boring article about an insurance dispute -- whatever -- and the Panel declined the expungement.
So -- you might ask, what's the big deal with this case Bill?
Regular readers of "BrokeAndBroker" know that I am often critical of the paucity of information and rationale that frequently occurs in far too many FINRA Arbitration Decisions. How about I use this Haynesworth arbitration to make the point. Yet again.
Albert Haynesworth III - sound familiar?
Haynesworth is the former NFL football player. A brief review of Haynesworth's Wikipedia profile discloses that he was
[D]rafted by Tennessee Titans in the first round (15th overall) of the 2002 NFL Draft, he spent his first seven NFL seasons with the Titans. An All-Pro selection in 2007 and 2008, and considered "the most dominant defensive tackle in the league",[1] Haynesworth was a highly coveted free agent following the 2008 season. He signed a seven-year, $100 million contract with the Washington Redskins in February 2009, [2] but he played less than two full seasons with Washington and the Redskins' acquisition of Haynesworth has since been widely derided as the worst free agent signing in NFL history. . .
In addition to that brief bio of his professional football career, Wikipedia offers this additional coverage:
Legal issuesArrest warrants were issued against Haynesworth in two Tennessee counties in May 2006 stemming from a traffic incident on Interstate 40. Both sets of charges were dropped in June 2006. The judge in the Putnam County case tossed the charges on the grounds that the alleged offense happened out of their jurisdiction. In Smith County, the district attorney dismissed the charges. In March 2009, Haynesworth was indicted on two misdemeanor traffic charges stemming from a December 2008 car accident in Tennessee.[35] In an accident on Interstate 65, Corey Edmonson was partially paralyzed after colliding with Haynesworth's car. Haynesworth was driving his Ferrari at speeds in excess of 100 mph when he struck Edmonson's vehicle, which struck a concrete barrier.[36]On June 22, 2010, it was reported that Clayton Bank & Trust was suing the NFL lineman, alleging that Haynesworth had failed to make payments on a loan in the amount of more than $2.38 million. The suit was filed in the Knox County Chancery Court on June 18, 2010. According to papers, Haynesworth entered a commercial loan agreement for the original principal amount of $2,381,688.58 on June 27, 2009. On February 27, 2009 the two parties entered into an Extension Agreement with an effective date of February 27, 2010, according to the suit. The attorney for Clayton Bank & Trust, Hugh B. Ward, Jr., was seeking a little over $2.4 million.[37]In 2010, Silvia Mena, a stripper from New York, claimed in a $10 million lawsuit that Haynesworth impregnated her and left her with no financial assistance.[36]In 2011, Haynesworth allegedly threw a punch to the nose of Joel Velazques, 38, of Leesburg, Va. during a traffic altercation[38]
Okay, c'mon now, close your mouth -- your jaw apparently just hit the floor. You're right though, none of that even remotely made it into FINRA's Decision.
As to the FINRA arbitration, well that seems to have started out in 2009 when Haynesworth filed a civil lawsuit in the Knox County Chancery Court, Tennesse against Verble and Morgan Stanley Smith Barney. Among the allegations in the Complaint are that Verble was supposed to "take care of finding or providing" adequate insurance for Haynesworth relative to his net worth. It was further alleged that in 2008, Verble failed to obtain either an umbrella policy or additional coverage, leaving the professional athlete financially exposed to claims in a 2008 car accident if the claims exceed his liability insurance limits. Thereafter, the case moved to a FINRA arbitration.
In BrokeAndBroker's tradition of leaving no stone unturned for its readers, we have gone to great expense to obtain a copy of the Tennessee Court Complaint, which you can read in full-text.
Now that's how a raconteur tells a story!
NEW EPISODE OF
SIDE BAR WITH BILL SINGER
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SIDE BAR WITH BILL SINGER
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Brian Carlis, Esq. Talks About Industry Arbitration