Financial Advisers Winning Big Money from Former Firms


Financial advisers are winning large arbitration awards against their former firms. During the past three months at least three arbitration panels have ordered financial services firms to pay millions of dollars to financial advisers formerly employed by the firms.

Most recently, a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Citigroup to pay $24 million to two Boston financial advisors and their assistant for breaching its promise to pay them a percentage of the revenue they generated from the stable of clients they brought with them from their previous firm (See “Financial advisors win $24m in Citigroup ruling,” Boston Globe).

The award consisted of $15,800,000 in compensatory damages plus seven (7) years of interest at 8 percent per annum plus $1,000,000 in “sanctions” (read punitive damages), which shows that the arbitrators thought there was something very wrong with Citigroup’s conduct. The advisors’ clients included several venture capital firms and a large communications company, according to the article. That case is James Bryan Minchello et al. v. Citigroup Global Markets Inc. et al., FINRA Arbitration Case No. 09-02800.

Last November, a FINRA arbitration panel ordered RBC Capital markets Corporation f/k/a/ RBC Dain Rauscher Inc. to pay $5.3 million to a Dallas investment adviser who claimed his career was damaged by his former firm’s defamatory statements about him in connection with his termination. That case is Mel H. Schonhorst v. RBC Capital Markets Corporation f/k/a/ RBC Dain Rauscher Inc., FINRA Arbitration Case No. 10-03097.

In December, a FINRA arbitration panel ordered Deutsche Bank Securities to pay a former registered representative over $4,000,000 for systematically blocking the representative from doing business. The award included over $300,000 in attorneys fees and over $1,600,000 in punitive damages based upon a finding that the firm’s conduct was reprehensible. That case is Stephen Colavito v Deutsche Bank Securities, Inc, FINRA Arbitration Case No. 10-01557.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.