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Broker Wins Unusual FINRA Arbitration Award Regarding A Forgivable Loan

Paul Tanner, a former Lehman Brothers Holding Inc. (“Lehman”) broker, won a Financial Industry Regulatory Authority, Inc. (“FINRA”) arbitration against his former employer regarding an unpaid amount of a forgivable loan that Tanner purportedly owed to Lehman. In its Statement of Claim, Lehman alleged breach of contract and unjust enrichment claims for failure to pay the promissory note, and requested $366,368.77 in compensatory damages. Tanner asserted counter-claims against Lehman, including that he was due $1.7 million for referral fees on investment banking business he brought to Lehman, and supported his counter-claims with documentation establishing that he was the source of numerous banking deals brought to the Lehman’s investment bankers. The FINRA arbitration panel presiding over the arbitration denied Tanner’s counter-claims, but held that Tanner did not have to pay back the remaining amount of the loan which was not forgiven, in the amount of $337,000. Furthermore, the FINRA arbitration panel held that Tanner was not liable to Lehman for interest, attorneys’ fees or collection costs. This arbitration award is an example of the exceptions to the normal result of broker note collection cases as it is extremely unusual for a broker to win. Experienced counsel can help advisors like Tanner identify which fact patterns fit the exception and make a case worth fighting. The lawyers at Lax & Neville LLP have that experience.

Lax & Neville LLP has represented individuals, securities industry employees, financial services professionals and securities industry companies nationwide in employment matters and securities-related and commercial litigation, including loan default cases and Form U-5 expungement matters. Please contact our team of attorneys for a consultation at (212) 696-1999.