Jan 8 A former private wealth adviser for a unit of Lehman Brothers Holdings Inc can keep a lucrative signing bonus he received from the firm three years before it collapsed, a securities arbitration panel has ruled.
Lehman lost its bid to recoup $1.8 million from William Gourd, who joined the firm in early 2005, according to a ruling this week by a Financial Industry Regulatory Authority arbitration panel. A Lehman spokeswoman declined to comment.
Lehman Brothers Holdings Inc has been pursuing roughly 50 of its former licensed securities professionals to return portions of the bonuses they received when hired. The firm, which filed for bankruptcy in 2008, emerged from the process in March 2012 as an entity that liquidates Lehman assets to repay creditors.
Signing bonuses, often referred to as 'employee forgivable loans' are paid by firms to brokers and other licensed securities professionals up front and structured as loans forgiven over time, typically a seven-to-10-year period. The amount varies and reflects the employee's anticipated future compensation based on past performance.
Brokers who leave the firm before the loan term is over must return part of the payment. That was case for many Lehman brokers who lost their jobs after the company filed for bankruptcy and Barclays PLC bought its U.S. brokerage arm.
Arbitrators rarely rule in favor of brokers who try to keep their bonus money after leaving a firm. The Lehman situation, however, is unusual because brokers departed because of the firm's bankruptcy.
Outcomes in Lehman's efforts to claw back bonuses have been mixed. Arbitrators have ruled in its favor in some cases, but allowed employees to keep their bonuses in others. It is unclear how many cases have been settled.
Lehman filed its arbitration case against Gourd in 2012, alleging that he breached a contract with the firm, according to the ruling, dated Monday. Gourd's original bonus was over $2 million, according Daniel Dwyer, a lawyer in Boston who represented Gourd.
The case hinged on a clause in the bonus contracts that required employees to repay amounts they owed on the bonuses if they left the firm. "Nobody left Lehman," Dwyer said in an interview. "On the contrary, the people who stayed to the bitter end were loyal employees," he said.
The arbitration panel, however, did rule against Gourd in a counterclaim he filed seeking $5.5 million in damages, which Dwyer said included unpaid commissions and restricted stock. "The counterclaims were legitimate, but we understood we had an uphill battle there," Dwyer said.
Gourd, now a private wealth adviser for a unit of UBS AG in Stamford, Connecticut, declined to comment on the ruling.