When a former Citigroup Global Markets employee hits the firm with a FINRA Arbitration demand for over $16.5 million in damages, we know that there was likely a lot of bad blood engendered by what was alleged to be a wrongful termination. By the time the arbitration ended, there was quite a bit of blood pouring out of Citigroup as the firm took quite a beating before the final bell rang.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2016, Claimant Gherardi asserted defamation on his Central Registration Depository ("CRD") and Uniform Termination Notice for Securities Industry Registration ("Form U5"); tortious interference with prospective economic relations; wrongful termination and/or breach of contract and/or promissory estoppel; violation of the common law of securities arbitration; and tortious interference with contractual relations. The causes of action relate to Claimant's termination of employment with Respondent Citigroup Global Markets. Claimant sought at least $16,500,000.00 for lost earnings; punitive damages; expungement of defamatory Form U5 language on his CRD records; interest; costs; attorneys' fees; and a declaration that the non-solicitation clause in the Citi Employee Handbook is unenforceable as to him. In the Matter of the FINRA Arbitration Between Christian S. Gherardi, Claimant, vs. Citigroup Global Markets, Inc. and Michael R. Averett, Respondent (FINRA Arbitration 16-01001, February 28, 2018).
Respondents Citigroup and Averett generally denied the allegations and asserted various affirmative defenses.
The FINRA Arbitration Panel denied Claimant Gherardi's claims as to Respondent Averett.
The FINRA Arbitration Panel found Respondent Citigroup liable and ordered it to pay to Claimant Gherardi:
SIDE BAR: The applicable questions on the Uniform Termination Notice for Securities Industry Registration ("Form U5"):3. FULL TERMINATIONIs this a FULL TERMINATION?Note: A "Yes" response will terminate ALL registrations with all SROs and all jurisdictions.Reason For Termination:Discharged Other Permitted to Resign Deceased VoluntaryTermination Explanation:If the Reason for Termination entered above is Permitted to Resign, Discharged or Other, provide an explanation below:If amending the Reason for Termination and/or termination explanation, provide an explanation below:
The Panel did not recommend the change of the Reason for Termination on Claimant Gherardi's Form U5 but did recommend that the Termination Explanation be changed to read: "Terminated without cause."
Bill Singer's Comment
Online FINRA BrokerCheck records as of March 4, 2018, disclose that Gherardi was first registered in 1996 with Citicorp Investment Services, where he remained until May 2007, at which time he joined Citigroup Global Markets, Inc., where he remained until January 2016.
Although the FINRA Arbitration Decision does not present sufficient content and context to inform us of the specifics of the underlying employment dispute, we can infer from the array of Gherardi's allegations that after some 20 years of service to various Citigroup entities, he did not leave on happy terms. The $16.5 million in requested lost-earnings damages also implies that Gherardi was a major producer.
The interesting aspect of the award is that the arbitrators not only awarded Gherardi over $3.4 million in compensatory damages for wrongful termination but they also tacked on two six-figure awards for lost trails and deferred compensation. Those who follow FINRA arbitrations closely know that arbitrators are often loathe to award any deferred comp and tend to be equally stingy when it comes to lost trails. In addition to hitting Citigroup with a seven-figure award, the arbitrators also gave Gherardi a measure of exoneration when they deemed that he had been "terminated without cause." Compliments to Gherardi's lawyer: Ethan A. Brecher, Esq., Law Office of Ethan A. Brecher, LLC, New York, New York.