Following six days of hearings, a FINRA arbitration panel in Chicago awarded RLR client Kieran Fitzgerald $1,335,000 in compensatory damages for defamation against his former employer Sun Trading LLC, a high-frequency trading firm, which improperly marked his Form U5 and accused him of sabotaging the successful market-making algorithm that he had created for the firm.  The three-arbitrator panel also recommended full “expungement” from Mr. Fitzgerald’s industry record of all such false statements.  A copy of the Award can be found here.

In a modern-day David and Goliath battle, Sun Trading, represented by Seyfarth Shaw, commenced arbitration against Mr. Fitzgerald, seeking in excess of $1,000,000 in damages for breach of contract, breach of fiduciary duty, and violation of the Computer Fraud and Abuse Act.  The causes of action all related to Sun’s claim – now completely discredited – that Mr. Fitzgerald, prior to resigning from the firm, made a “series of unauthorized alterations and deletions to one of Sun’s proprietary trading algorithms.”

Mr. Fitzgerald hired RLR litigation partner Harry W. Lipman, who, with assistance from Stacy L. Ceslowitz, of counsel to the firm, filed counterclaims on Mr. Fitzgerald’s behalf, asking for expungement and damages for defamation.

The facts of the case are extraordinary.  Three days after Mr. Fitzgerald resigned from Sun, the firm unilaterally placed him on “unpaid leave” and shortly thereafter fired him and reported to FINRA that Mr. Fitzgerald had made unauthorized changes to Sun’s trading systems in violation of firm policy and industry standards of conduct.

Six months later, just as Mr. Fitzgerald was starting his new job (which he had secured prior to resigning from Sun), Sun escalated its attack by commencing the arbitration against Mr. Fitzgerald.

RLR filed counterclaims for Mr. Fitzgerald for defamation and expungement, and engaged in an aggressive and highly technical course of discovery to unearth the truth behind the allegations.

RLR’s dogged approach to discovery paid off.  The documentary evidence and, later, witness testimony revealed that Sun’s “internal review” was, at best, baseless, the allegations of wrongdoing were unsupported, and Sun’s arbitration was calculated to interfere with Mr. Fitzgerald’s career.  Following six days of hearings, the FINRA panel denied all of Sun’s claims and awarded Mr. Fitzgerald $1,335,000 in compensatory damages for defamation and recommended complete expungement of all allegations of wrongdoing from Mr. Fitzgerald’s FINRA record.