May 12 The brokerage unit of Stifel Financial
Corp must pay a total of $2.7 million to a former head trader
who said the firm defamed him and wrongfully withheld his bonus
payment, a securities arbitration panel has ruled.
A Financial Industry Regulatory Authority panel found
Stifel, Nicolaus & Company liable in a case filed by Sean
Horrigan, according to a ruling late on Friday. Horrigan had
worked for Stifel and for a firm it acquired for a total of 14
years, according to a regulatory filing.
A Stifel spokeswoman declined to comment.
The case marks a rare instance in which a licensed
securities professional prevailed in a defamation claim against
a former firm, say lawyers.
A successful outcome is unusual and typically stems from
facts that are very unfavorable to the firm, said Thomas Potter,
a lawyer for Burr & Forman in Nashville, Tennessee, who
represents brokerages and who was not involved in the case.
Horrigan became the head of agency trading at Piper Jaffray
shortly after his departure from Stifel.
He filed the case in 2012, alleging Stifel defamed him by
including certain allegations about his termination in a form
that brokerages must file in an industry database when brokers
leave. Horrigan, who initially requested more than $2.8 million,
also alleged that Stifel breached his employment contract by not
paying a bonus he earned, according to Jonathan Sack, the New
York lawyer who represented him.
The dispute dates back to a telephone call Horrigan
overheard when he mistakenly picked up one of several phones on
the trading desk, Sack said. During the call, a New York manager
made disparaging personal remarks to a salesperson in Baltimore
about Horrigan's wife, who had also worked for Stifel, Sack
said. Horrigan hung up and reacted emotionally at his desk after
trading hours, Sack said.
Stifel demoted Horrigan and then fired him six weeks later
in early 2012, weeks before the firm paid its 2011 bonuses, Sack
said. Stifel then argued Horrigan was not entitled to a bonus
for his work in 2011 because he was no longer employed there on
the day it handed out the payments, Sack said.
"It's a fiction that you don't get to earn your bonus if
you're not there on bonus payout day," Sack said.
Industry professionals are often duped into believing that
is the case, but it typically is not, unless they signed
contracts that require them to be employed on that day, Sack
The firm then wrote in Horrigan's dismissal paperwork that,
while Horrigan had not harmed customers, he had "engaged in
unprofessional conduct that was detrimental to management and
co-workers," according to a statement of claim.
The FINRA panel ruled the phrase was defamatory and
recommended a new phrase that said his conduct "was not in
parity with management's new strategy," according to the ruling.
The panel did not explain the reasons for its decision, as
is typical of FINRA arbitration rulings.
(Reporting by Suzanne Barlyn. Editing by Andre Grenon)