Citigroup Says it Overpaid Former Managing Director -- he disagrees in FINRA Arbitration

July 8, 2011

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in April 2009, Claimant Citigroup alleged that it had mistakenly paid $900,000 to its former employee Respondent Orefice.  In addition to seeking recoupment of the $900,000 on the basis of unjust enrichment, Claimant Citigroup sought interest, costs, fees, disbursements, and attorneys's fees. In the Matter of the FINRA Arbitration Between Citigroup Global Markets Inc., Claimant vs. Anthony Orefice, Respondent  (FINRA Arbitration 09-02278, July 1, 2011)

Respondent Orefice generally denied the allegations and asserted various affirmative defenses.

The Old Double Dip?

According to the FINRA Arbitration Decision, Claimant Citigroup wanted to recover one of two $900,000.00 payments it had made to former employee Orefice, a 14-year veteran and by 2007, a Managing Director.

Retention Award

In July 2007, Claimant had agreed to pay Respondent $900,000.00 as a "guaranteed incentive and retention award" payable no later than March 15, 2008, provided that he did not voluntarily terminate his employment. 

Separation Payment

In January 2008, Claimant and Respondent entered into a "Separation Agreement and Release" which provided for, among other things, a $900,000.00 special payment to Respondent because of the termination of Respondent's employment with Claimant due to a reduction in the workforce.

At this point, the two parties disagree as to what was contemplated, what was meant, and what the consequences should be.  Unfortunately, the FINRA Decision isn't particularly clear as to the mechanics of the now disputed payment(s). It appears that Claimant Citigroup paid Respondent Orefice two $900,000.00 payments, at least one of which was dated January 29, 2008.

Apparently, Claimant Citigroup asserted that the second $900,000.00 special payment provided for in the January 2008 Separation Agreement was supposed to supplant, not supplement the guaranteed incentive and retention award and that Respondent in essence received two $900,000.00 payments in error. By "supplant," Claimant means that it was to replace. By "not supplement," Claimant means there was only one $900,000 payment contemplated.

Clearly, Claimant's supplant and supplement did not have the same definition in Respondent's lexicon.  As far as Respondent Orefice was concerned, he did not voluntarily retire and fully earned out his $900,o00 retention award; and, was also entitled to the second separation payment as a bargained for benefit.


The FINRA Arbitration Panel found that Claimant and Respondent entered into two separate and enforceable agreements, and that the first $900,000.00 payment (the guaranteed incentive and retention award) was not part of the consideration for the separation agreement. As the Panel saw it, the second payment was not intended to supplant but it was intended to supplement.

Although the FINRA Panel allowed that:

Claimant may not have wished to twice pay Respondent $900,000.00, Claimant drafted two separate contracts calling for such payments, and made payments pursuant to those contracts. The Panel finds unpersuasive Claimant's arguments for equitable relief to vitiate contracts which it drafted and executed and which both parties performed.

As such, the Panel denied Claimant's claims.