CA financial adviser told to pay $3.7 million to ex-employees

On Behalf of | Jun 18, 2014 | Business Litigation |

Litigation comes with great expense and uncertain results. If you’re involved with a serious business dispute you should appreciate the benefits of avoiding the courtroom unless it is absolutely necessary. With solid legal planning, mediation or arbitration may be the most cost-effective way of resolving a dispute. If an out-of-court settlement can’t be reached, then you will need experienced attorneys who are prepared to litigate.

A California financial adviser says he intends to go to court after a panel of securities arbitrators ruled in favor of two of his former employees. The ex-employees claimed their boss defamed them after they voluntarily left the asset management company to start their own firm. The boss, however, said the two men were dismissed in 2011 after they misled clients regarding their investments. The clients filed a lawsuit against the former employees seeking to hold them responsible for losses in real estate investments. The client complaint was eventually withdrawn, but the three-member arbitration panel proceeded to hear the counterclaims brought by the ex-employees. The two advisers said their former boss instigated client complaints, planted allegations of fraud and purposely deterred customers from doing business with the advisers’ new firm. The panel found that the adviser should pay a total of $3.7 million to his former employees. That sum includes $2.5 million in punitive damages, $800,000 in compensatory damages and $340,000 in attorneys’ fees. One would think these three men could see the benefits of taking their fate in their own hands and negotiating a resolution based on the legal or economic realities posed by any subsequent litigation.

Mediation is a private, practical and cost-effective way of resolving disputes. In the event mediation is unsuccessful they should consider arbitration as a means of litigating the dispute without airing their dirty laundry in public. To achieve the best possible outcome in either forum it is a good idea to have a full service business firm with experienced business attorneys that have real trial experience representing your interests. If mediation fails you are well prepared to take the next step into litigation.

Source: Business Insurance, “Two financial advisers awarded $3.7M from ex-boss by arbitration panel,” June 6, 2014

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