| NEW YORK, June 5
NEW YORK, June 5 A California wealth adviser
must pay two ex-employees almost $3.7 million for allegedly
defaming them, a securities arbitration panel found.
The Financial Industry Regulatory Authority arbitration
panel ruled in favor of Corey Casilio and William Leitch, who
claimed that John Valentine, their former boss, made defamatory
accusations against them after they left Valentine Capital Asset
Management Inc, in Danville, California, in 2011 to start their
own advisory firm.
The three arbitrators in the case, all of whom are
considered "public arbitrators" because they are not tied to the
securities industry, took the unusual step of awarding Casilio
and Leitch punitive damages of $2.5 million, in addition to
compensatory damages of $800,000, according to the case's award
document. The arbitrators also ruled that Valentine must pay
Casilio and Leitch's attorneys' fees, totalling almost $340,000.
The panel concluded that Valentine instigated customer
claims against Casilio Leitch Investments in Walnut Creek,
California, collaborated to plant accusations of fraud, created
false evidence and coerced one of the firm's clients to
manipulate Google's search results to show defamatory
accusations with the purpose of deterring clients from doing
business with the two advisers, according to the ruling posted
on Finra's website.
Valentine alleged Casilio and Leitch were both dismissed
from his firm, while his former employees said they left
voluntarily, according to the case file.
This case came before the panel after some of Valentine
Capital's clients filed a complaint against Casilio and Leitch,
blaming them for alleged losses from real-estate investment
trust investments. The clients withdrew their case prior to the
hearings, which occurred in April, but the arbitrators proceeded
to rule on counterclaims presented by Casilio and Leitch against
Valentine, the award statement said.
Valentine denied the charges and said he will seek to get
the award vacated in court. Valentine told Reuters the
arbitrators, whom he referred to as "three jokers," did not have
sufficient knowledge of the industry to make a ruling.
"It was a mockery of the justice system," Valentine said,
"This case was decided by three panelists with zero experience
in the investment world."
Valentine also maintained that Casilio and Leitch misled
clients about their investments while the two were working at
Casilio declined to talk about the decision when reached for
comment and Leitch could not be reached for comment.
(Reporting By Michael Leibel. Editing by Andre Grenon)