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FINRA Legal Arbitration Decided Against Corporate Raiders

Monday, April, 2, 2012

Corporate espionage is a risky business, and the penalties of getting caught are tremendous. In the FINRA legal arbitration, In the Matter of the FINRA Arbitration Between SWBC Investment Services, LLC, Claimant/Counter-Respondent, vs. Titleist Asset Management, Ltd, Respondent and Greg Thompson, Respondent/Counter-Claimant, this point is underscored.

Background of the Breach of Contract Arbitration


According to the Claimant, Mr. Thompson resigned from SWBC and joined Titleist, taking along with him their client information. He additionally deleted some crucial files from the company’s laptop in his possession. Both of these actions were a breach of his employment contract and non-competition covenant. Additionally, SWBC claimed that Titleist helped Mr. Thompson in doing this and also interfered with other SWBC employees.


SWBC brought against them accusations of conspiracy, tortious interference, violating Regulation S-P, and misappropriation of trade secrets. Thompson and Titleist denied these allegations, made their defenses and made a counterclaim that SWBC did not pay some of Thompson’s commissions and regular compensation.

The Decision in this Employment Arbitration


This FINRA panel found Mr. Thompson liable to SWBC and denied his counterclaim with prejudice. Thompson has to pay SWBC $30,800 in damages and an annual post-award interest of 6 percent, 1800 in arbitration costs, and $30,000 for legal fees.


Also, they ordered him to destroy all copies, including the original, of specific tape recordings, and remove and destroy the database containing the stolen information, along with all data downloaded from it. Both of the Respondents were ordered to instruct outside parties with this information to destroy all the information they had related to this arbitration.


These days, many employees become disgruntled and take on a mercenary mentality, especially in the financial community. Additionally, many employers, brokers especially, have an elevated level of concern about their trade secrets. Every employee, no matter how disgruntled, should take care to honor their agreements, or they could find themselves losing big in contract arbitration.