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FINRA awards $1 in damages against former employee

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Sep 27, 2010 1:18 pm

FINRA Arbitration Panel Awards $1 Compensatory Damage Against Former Employee

In a Statement of Claim filed in May 2008, Claimant Obsidian Financial Group, LLC sought a permanent injunction against its former employee Vincent D. Bentivegna in order to prevent him from misusing the firm’s allegedly confidential, proprietary, and trade-secret information. Claimant Obsidian sought to compel Respondent Bentivegna to immediately return records and to restrain him and others from improperly soliciting clients. Also, Claimant requested an order from the FINRA Arbitration Panel allowing the firm to inspect Respondent’s computers, after which Respondent Bentivegna would be required to purge certain allegedly improperly obtained information and to impose a constructive trust on all income derived from any unlawful conduct. In addition to injunctive relief, Claimant sought compensatory damages in an amount to be determined by the Panel plus attorneys’ fees and costs (at the close of the hearing, said damages were calculated by the Claimant as between $22,- and $23,000). In support of its damage claims, Claimant Obsidian asserted breach of employment agreement, theft of trade secrets, breach of fiduciary duty, and post-departure breaches of fiduciary duty, usurpation of a corporate opportunity, unfair competition, and conversion. In the Matter of the Arbitration Between Obsidian Financial Group, LLC, Claimant, v. Vincent D. Bentivegna, Respondent (FINRA Arbitration 08-01373, September 22, 2010). 

Respondent Bentivegna denied the allegations made in the Statement of Claim and asserted various affirmative defenses.

The FINRA Arbitration Panel found that Respondent Bentivegna was liable and ordered him to pay to Claimant compensatory damages in the amount of $1.00. Claimant's request for a permanent injunction was denied.

Bill Singer’s Comment: For starters, that's not a typo for the awarded damages -- it's $1, as in one buck.  While you are free to infer whatever you wish, it's pretty clear that the combination of the lousy one-dollar damage award and the denial of injunctive relief was far from a victory for Claimant Obsidian.  Frankly, it's pretty much a slap in the face delivered from back of an arbitration panel's hand.  True, Respondent Bentivegna was found "liable" but that appears to have been a verdict rendered with some dripping sarcasm.

Those of you familiar with the BrokeAndBroker Blog may recall our June 2010 article about another Obsidian FINRA Arbitraion: “Former Associated Persons Slam FINRA Member Firms in Arbitration” at . In that case, three former employees sought unpaid commissions from three Respondent firms (one of which was subsequently dismissed from the case). Obsidian was one of the two remaining respondents. As reported in that blog:

In April 2010, Claimants filed a Motion for Sanctions. The Panel subsequently granted the Motion and ordered Respondents to pay Claimants a $10,000 sanction (jointly and severally liable) to compensate them for their costs in repeatedly pursuing discovery.
In relatively harsh language the Panel noted that:

Respondents evidenced throughout this arbitration, from the filing of this claim to the hearing, a complete lack of cooperation and also exhibited a lack of respect for the arbitration process.