An arbitration panel has done what it was asked: to reconsider the $25 million in damages awarded to former Waddell & Reed broker Stephen Sawtelle. Their decision? Sawtelle should still get the money, according to a decision reached Sept. 4.
Previously, the Appellate Court of New York had upheld the compensatory damages and attorneys fees of the original $27 million award, but those pieces only came to about $2 million. But the court, in an April decision, asked the NASD arbitrators to reconsider the $25 million award for punitive damages, and for a time, it appeared that the award—the largest ever given to a broker who had sued his former firm—would be reduced to a substantially smaller figure.
In its statement, though, the arbitration panel found that Sawtelle should get the $25 million based on "reprehensible conduct" by Waddell & Reed, saying they "conducted a horrible campaign of deception, defamation and persecution." Sawtelle had sued Waddell & Reed after what he felt was an unjust termination in 1997—and Waddell subsequently rerouted client letters and phone calls, told clients that Sawtelle was untrustworthy, and had left the business and may have been involved in criminal activities.
Sawtelle was first awarded $27 million in August of 2001, but Waddell appealed the decision. The drawn-out nature of this process means that Sawtelle’s attorney, Jeffrey Liddle of Liddle & Robinson in New York, isn’t satisfied just yet. "I’ll answer ‘yes’ to that question when we get the money," he said in an interview.
The award has to be confirmed, and Waddell has already said that they will continue to try to appeal the decision, although Liddle believes the Appellate Court doesn’t have much choice other than to confirm the decision this time around. A spokesman for Waddell & Reed was not immediately available for comment.