First Republic Ordered to Pay Broker $1 Million for ‘Unwarranted’ Termination
In an unusually strong wrongful termination ruling, an arbitration panel has ordered First Republic Bank to pay a New York broker more than $1 million in damages, absolve him of having to honor a promissory note, clear his regulatory record and unfreeze his almost $50,000 brokerage account.
The three-person Financial Industry Regulatory Authority arbitration panel on Thanksgiving Eve awarded Christopher Rusk compensatory damages of almost $777,000 as well as $283,660 in costs and attorneys’ fees. First Republic’s counterclaim for almost $143,000 plus interest on the promissory note agreement was denied.
“The total number is a complete vindication for him,” said Brian Neville, whose Lax & Neville law firm represented Rusk.
A spokesman for San Francisco-based First Republic, which recruited Rusk from Merrill Lynch in December 2010 and terminated him almost six years later, declined to comment on the arbitration decision. The bank, which was owned by Merrill Lynch between 2007 and 2009, has been an aggressive recruiter of wirehouse brokers in recent years.
Rusk, who began his brokerage career 12 years ago at Bank of America and is now an independent broker with Ameriprise Financial Services, said he was happy to be vindicated over a case that his lawyer said had clear facts in his favor.
“It was a very long and torturous two years,” Rusk said.
First Republic discharged him in August 2016 for engaging in an “unapproved, undisclosed outside business activity in violation of firm policy,” his BrokerCheck history said.
Rusk responded on his regulatory filing that his supervisor and compliance officer at the bank wrongly indicated that he could continue receiving trailing commissions on 401(k) investments from his former employer. “Instead of working with me internally to solve the problem, the company just terminated me,” he wrote on his BrokerCheck comment about the termination.
The arbitrators apparently agreed. It ordered First Republic to change the “defamatory” reason for his termination in regulatory filings to “other,” and to add that the termination was “unwarranted.”
Rusk provided the arbitrators documents and emails to show First Republic’s knowledge and approval of arrangements its new broker had made to continue receiving trails directly from fund companies, Neville said. But the bank’s stand made it difficult
Rusk, who is in his early 30s, affiliated for about 18 months with Wunderlich Securities—now a unit of B. Riley Securities—while waiting for the arbitration ruling.
The broker declined to discuss his reasons for leaving Wunderlich. Neville said his attempts to move to better-known firms that could help him win clients following his dismissal from First Republic were foiled by First Republic’s filings on his dismissal.