Investacorp and Ladenburg Thalmann Named in Multi-Million FINRA Employment Dispute

In a FINRA Arbitration Statement of Claim filed in May 2009, Scott Sherwood asserted causes of action for 

• breach of contract as to Respondent Investacorp ("Count 1"); and,
• tortuous interference as to Respondent Ladenburg ("Count 2").

The causes of action relate to Claimant Sherwood's former employment with Respondent Investacorp, as well as Respondent Ladenburg's alleged interference with Claimant's and Respondent Investacorp's employment agreement. Respondents generally denied the allegations and asserted various affirmative defenses. In the Matter of the Arbitration Between Scott Sherwood, Claimant, vs. Florida Investacorp, Inc. and Ladenburg Thalmann Financial Services, Inc., Respondents (FINRA Arbitration 09-02722, November 11, 2010).

Claimant requested:

• as to Respondent Investacorp relating to Count 1: compensatory damages in the amount of $5,000,000.00 and that the Panel declare the non-compete and non-solicitation clauses in the employment contract to be void and/or unenforceable;
  
• as to Respondent Ladenburg relating to Count 2, compensatory and punitive damages in the amount of $5,000,000.00; and,
  
• as to both Respondents relating to Counts 1 and 2, attorneys' fees, interest and costs.

At the close of the hearing, Claimant requested:

• Count 1, compensatory damages in the amount of either $1,072,750.00, comprised of Base, COLA, Options, and Triad, or alternatively, $3,525,000.00 comprised of Triad and Jenkins/Rex; and,
  
• Count 2, compensatory damages in the amount of $1,600,000.00 and punitive damages in the amount of $3,200,000.00. Respondents requested denial of the Statement of Claim.

During the evidentiary hearing, Claimant moved to amend his Form U5 in order to replace the reason for termination listed thereon by Respondent Investacorp. The Panel determined that it would consider this amendment and make a final determination based upon all of the evidence and testimony presented.

FINRA Panel's Decision

The Panel found Respondent Investacorp liable on the claim of breach of contract and ordered the firm to pay Claimant compensatory damages in the amount of $50,000.00.

The Panel recommended the expungement of the termination comment: "Non Sales Practice Violation" from Section 3 of Claimant Sherwood's Form U5, as filed by Respondent Investacorp, Inc. on March 11, 2009 and maintained by the Central Registration Depository ("CRD"). In addition, the Panel recommended the following replacement language for the expunged termination comment:  "Without Cause."

The reason for termination "Other" shall remain the same.

• Investacorp
• Ladenburg
• FINRA
• Arbitration
• Bill Singer
• BrokeAndBroker.com