A FINRA (Financial Industry Regulatory
Authority) arbitration panel has ordered Citigroup Inc. to pay firm clients
approximately $24 million for “allegedly breaching their contract.”
In 2002, Prince Lobel’s clients, two
financial advisers and their assistant, were recruited by Citigroup (then Smith
Barney), and brought with them all of their clients and their clients’ assets.
The advisers were paid by commission as a percentage of revenue generated from
their clients’ transactions.
According to Peter Pendergast, a partner in Prince Lobel's Litigation Practice Group, "Citi paid them in
part on the first few transactions but subsequently cut them out of
participating in the communications and transactions with their clients and
refused to pay them."
Regarding the panel’s award, Peter stated, "The
award reflects a just result and a rebuke to the practice of certain industry
participants accepting the benefit of executing transactions on behalf of
financial advisers' clients and refusing to pay promised compensation.”
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