FINRA Arbitration Panel Orders Stifel Nicolaus to Pay $2.7M to Ex-Head Trader

A Financial Industry Arbitration Panel says that Stifel Financial Corp. (SF), the brokerage unit of Stifel Nicolaus, must pay $2.7 million to, Sean Horrigan. Stifel’s ex-head trader claims that the brokerage firm defamed him and withheld his bonus without just cause. Now, the panel is holding the broker-dealer liable.

Horrigan was fired from Stifel in 2012. According to his lawyer, his termination happened several weeks after he overheard a phone call in which a manager insulted his wife to a salesperson. Horrigan’s wife was also employed at Stifel at the time. After the incident, he reacted emotionally. It was after trading hours. The firm then demoted him before letting him go just weeks prior to giving him his bonus for 2011.

Stifel contended that Horrigan was not entitled to get that money because on the day that the bonuses were issued he no longer worked for the firm. His attorney, however, says that unless an industry professional signs a contract mandating that an employee has to be employed on bonus payout day, he/she is still entitled to that money.

The brokerage firm wrote in his dismissal paperwork that the ex-head trader behaved in a manner that was “detrimental to management and co-workers.” This information was included in his form U5, which states the “reason for termination.” Form U5s have to be sent to the Central Registration Depository.

The FINRA panel found that the language used to describe Horrigan’s termination was defamatory. Its members recommended that the verbiage “was not in parity with management’s new strategy” be used instead.

The panel decided that Stifel was liable and would have to pay Horrigan $1.9 million plus interest in compensatory damages, and over 5,800 in Stifel, Nicolaus, and Co., Inc. stock (or the cash equivalent).

Compensation disputes involving financial firms and their employees are not uncommon. Recently, ex-Goldman Sachs Inc. (GS) trader Deeb Salem said he wants the firm to pay him significantly more than the $8.25 million bonus he received for his work in 2010. Salem says that he helped the bank make over $7 billion that year. The former Goldman Sachs trader contends that the bonus he should have gotten was unfairly docked due to a written warning regarding a 2007 self-evaluation.

A FINRA arbitration panel rejected Salem’s claims. Now, his lawyer has filed a petition in New York State Supreme Court. Salem wants $16.5 million in deferred compensation from Goldman Sachs.

FINRA Withdraws Proposal Ordering Brokers To Reveal Big Bonuses
In other news regarding broker bonuses, FINRA has withdrawn a proposal that would obligate brokers to tell clients about any substantial bonuses they received for switching to another firm. The move comes in the wake of criticism from the brokerage industry that the rule would be too expensive to implement.

The SRO intends to revise its proposal. It believes that customers should know about any financial incentives their representative got to switch firms and whether it will cost them for following the adviser or if their holdings will be impacted.

Stifel Nicolaus to pay ‘defamed’ trader more than $2.7 mlm, Reuters, May 12, 2014

A Young Ex-Goldman Trader Thinks His $8.25 Million Bonus Was Too Low, Business Trader, June 19, 2014

Finra Withdraws Proposal Requiring Brokers to Disclose Big Recruitment Bonuses, Wall Street Journal, June 23, 2014

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