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FINRA Arbitration Decision: Why Bother?

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Apr 14, 2010 11:04 am


FINRA Employment Arbitration: Never Mind

Written: April 13, 2010

In the Matter of the Arbitration Between Steven Esposito, Claimant, versus Citigroup Global Markets, Inc., Respondent. (FINRA 08-03070, March 31, 2010), Claimant Esposito alleged Breach of Contract; Violation of Right to Privacy; Intentional Interference with Existing and Perspective [Ed: I believe that should be “Prospective”] Business Relationships; and Conversion (at the hearing, Claimant was granted permission to add a claim for Fraud).  Claimant sought $600,000 in compensatory damages and $375,000 in punitive (at the close of the hearing, Claimant amended those claims by seeking compensatory damages of over $906,500 and $38,000 in attorneys’ fees).


Promises, Promises, Promises

Claimant alleged that he and Respondent Citigroup Global Markets, Inc. (CGMI) entered into an employment agreement, whereby CGMI provided him with a seven-year forgivable loan in the form of a promissory note (with an addendum that included newer notes); would commit to open a North Shore “satellite” office; and would provide him with

sales assistance; the firm’s maximum pay-out; syndicate allocation; and an advertising budget

Claimant alleged that CGMI failed to meet the terms of the agreement by

  Failing to provide syndicate allocation Failing to provide a proportional share of accounts from terminated/retired broker; Never attempting to open a North Shore “satellite office.”

Also, Claimant alleged that he was forced to move his book of business from CGMI, and that CGMI interfered with his ability to transfer his customers and failed to transfer a trust account that Claimant maintained with Respondent.


 No Way


Respondent CGMI generally denied the allegations and asserted affirmative defenses including: 

Claimant failed to state a claim upon which relief can be granted; The Statement of claim is barred by the doctrines of waiver, laches, ratification, and estoppels; Lack of standing; CGMI fully performed; Doctrine of unclean hands; Claimant was an “at-will” employee not bound to a specific term of employment. 

CGMI asserted a Counterclaim citing Breach of Contract based upon Claimant’s failure to pay back two promissory notes upon termination. At the close of hearing, Respondent requested $572, 924.21 in compensatory damages plus interest of $108,649.47, and attorneys’ fees of $85,938.16.