And obtains the relief – before he leaves his current employment
BUTLER v. PWI, NASD ID #01-00763 (Atlanta, 4/12/01):
In this unusual “raiding/recruiting” case, the broker seeks and obtains declaratory relief before he leaves the broker-dealer.
The broker was a partner in J.C. Bradford & Co., a Tennessee regional house acquired by PaineWebber. From the summary in this Award, it appears that the broker had not departed PaineWebber when he brought this injunctive proceeding under NASD Rule 10335.
In his claim, he sought preliminary and permanent relief that restrictive covenants in his employment agreement would be unenforceable, should he leave PWI. There is some indication that the broker also feared retaliatory action or that the sale of his partnership interest might in some way be encumbered. Thus, a number of issues were teed up for the three-person Panel to decide.
The Regular Injunctive Arbitrator made no apparent decision, except to refer the claims for relief to the full Panel. The full Panel acted within two months from filing, according the broker virtually most of his requested relief.
The Panel did caution, though, that, while the non-solicitation clause in the Employee Forgivable Loan Agreement “is void and unenforceable” against Claimant, PaineWebber may still have a claim to the proceeds of that loan.
(ed: Ripeness of the dispute in such circumstances was likely a real issue; PaineWebber objected that the Panel would be issuing an “advisory opinion,” since Claimant had not resigned and “PaineWebber has not engaged in any of the activities which Claimant seeks to enjoin .” It would not be wise to view this decision as reaching beyond its facts.) (SAC Ref. No. 2001-18-03)
Copyright 2000-2002 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to firstname.lastname@example.org. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards available anywhere. For more information regarding their services, visit their website at www.sacarbitration.com
Need help with a securities law issue? Call New York Securities Lawyer at 212-509-6544 or visit the website. Representing investors and advisers across the country for over 30 years.