Ex-Barclays brokers can keep nearly $4 million in bonus money -panel

(Reuters) - Two former Barclays stockbrokers can keep nearly $4 million in signing bonuses, an arbitration panel has ruled, handing down a rare rebuke of a controversial recruiting practice common among brokerage firms.

Barclays had tried to claw back the bonuses from brokers Ileana Platt and Rafael Urquidi after the pair filed a claim with Financial Industry Regulatory Authority’s (FINRA) arbitrators, seeking more than $9 million in damages.

Platt and Urquidi alleged that Barclays reneged on a number of pledges it made to the pair when it recruited them from Credit Suisse in 2012, according to a FINRA arbitration ruling dated Wednesday.

A Barclays spokeswoman declined to comment.

Firms often offer generous signing bonuses to woo talent from rivals, but structure the bonuses as loans that are forgiven over time to discourage them from leaving too soon. Brokers who leave the firm before the loan term is over must return part of the payment.

The arrangement has long frustrated brokers who complain that it keeps them bound to the firm even when it reneges on other hiring promises. But arbitrators have rarely ruled in favor of brokers trying to retain their hiring bonuses in such cases.

After they were recruited, Platt and Urquidi spent months convincing their Latin American clients to move their accounts to Barclays, said Jacob Buchdahl, the brokers’ securities lawyer in New York.

Then, in late 2013, Barclays decided to stop serving clients in Latin America. The move stranded Platt and Urquidi, whose clients lived mainly in Bolivia, Panama, Peru, and Mexico, Buchdahl said.

The two brokers decided to leave Barclays as a result, prompting Barclays to demand the return of a $2.6 million signing bonus from Platt and a $1.3 million bonus from Urquidi. The FINRA panel rejected Barclays claim. The panel, however, also denied the brokers’ $9 million damage claim.

Platt now works for the U.S.-based brokerage unit of the Royal Bank of Canada’s wealth management division, while Urquidi works for a unit of Wells Fargo & Co.

“[Platt and Urquidi] were the innocent victims of Barclays’ business decisions,” Buchdahl said.

Reporting by Suzanne Barlyn; Editing by Charles Levinson and Christian Plumb