* Brokerage must pay broker $500,000 in punitive damages
* Firm and director "manipulated documents"
By Suzanne Barlyn
Dec 7 A former broker who alleged that a firm
made false statements to lure him to work there is entitled to
$500,000 in punitive damages, an arbitration panel ruled.
GoNow Securities Inc, a Los Angeles-based brokerage, and
one of its former employees must pay the sum to former broker
Daniel Losito, plus $160,000 in compensatory damages, according
to a ruling by a Financial Industry Regulatory Authority
Punitive damages are rare, especially in cases filed by
brokers against brokerages, according to Luigi Spadafora, a
securities lawyer for Winget, Spadafora & Schwartzberg, LLP in
New York. "This is not a common occurence," he said. Panels
typically award punitive damages to punish egregious behavior
by the party that must pay.
The Finra panel in Boca Raton, Florida found that GoNow and
its director, Felix E. Ajegbo, who used the fake name "Johnny
Jones" in his dealings with Losito, "intended to commit a fraud
in the inducement," which was "intentional misconduct,"
according to the ruling dated last Friday..
Ajegbo pleaded guilty to a federal criminal conspiracy
charge in 1995 in an unrelated case, according to a disclosure
he made in regulatory filings.
GoNow and Ajegbo "manipulated documents" in order to make
Losito "believe in the legitimacy" of a new office location in
Florida, according to the arbitration panel. The firm and
Ajegbo "attempted to act in violation of FINRA rules" in order
to establish the Florida office when they were "not permitted
to do so," the panel wrote. They also made false statements
about the reason for Losito's termination on his Form U-5, a
document that brokerages file with regulators when an employee
leaves, according to the panel.
Lawyers for Losito, GoNow and Ajegbo did not return calls
requesting comment. A Finra spokeswoman said the regulator does
not comment on arbitration rulings.
(Reporting by Suzanne Barly. Editing by Richard Satran)