UPDATE: UBS Awarded Half of $1.1 Mln Note Claim Against Chicago Broker
(Updates with order from a second arbitration panel that Konecny pay JPMorgan $1.3 million.)
A pair of Chicago-area brokers got mixed results in arbitration decisions involving disputes with former employers that were published this week.
Rick Konecny, who had worked for at least 11 broker-dealers over his 26-year career, was ordered on Wednesday to pay UBS Financial Services $547,554 for failing to honor promissory notes he executed in return for loans extended from December 2008 to December 2011. A second arbitration panel on Thursday ordered the broker to pay J.P. Morgan Securities $1.3 million for promissory note obligations in a case that was initiated by the former broker.
UBS had alleged that Konecny owed it an unearned note balance of $1.08 million when he voluntarily resigned from the firm in July 2013, about four years after he joined from Morgan Stanley in November 2008.
Konecny, who could not be reached for comment and who represented himself before the arbitration panel after his lawyer withdrew, responded in a counterclaim that it was impossible or impracticable for him to fulfill his repayment promises “as a result of UBS’s wrongdoing and failure to fulfill the promises made to him during his recruitment,” according to the award statement.
In the J.P. Morgan Securities decision, Konecny sought $4 million, claiming wrongful termination and defamation related to his dismissal in April 2016 after two-and-a-half years. A three-person arbitration panel denied his claims and validated the broker-dealer’s counterclaim that he owed $865,000 on his promissory notes while adding interest, attorney’s fees and hearing costs.
Konecny, who did not appear at evidentiary hearings the two panels held this year, is not currently registered with a Finra member firm, according to his BrokerCheck history. It records four customer disputes over his career and a 2016 discharge by J.P. Morgan Securities for his alleged failure “to escalate client matters” and follow requirements related to executing discretionary trades.
In a separate decision by another trio of Chicago-based arbitrators, J.P. Morgan was ordered to pay Jose A. Valencia $100,000 in punitive damages for “reckless disregard of the accuracy of the U5 filing it made about his departure from the firm.
Valencia, now a broker with Allstate Financial Services, had sought more than $1.4 million in compensatory damages, none of which was approved, according to the award decision. It did not spell out the panel’s reasoning for its determination.
The arbitrators also granted Valencia’s request to expunge the explanation that J.P. Morgan had given for his termination, ordering that it be changed to say that he “requested and received excessive and unreasonable bank account fee reversals.”
Valencia’s BrokerCheck record includes no disclosures of his 11-year career, which included his one-year stint at J.P. Morgan, nor a reference to his dismissal.