Former LPL broker loses $30 million claim against old firm

Two of the three Finra arbitrators split their decisions in the case of James E. 'Jeb' Bashaw, a one-time star at LPL who was fired in 2014

Nov 2, 2017 @ 12:45 pm

By Bruce Kelly

A one-time star broker with LPL Financial lost a securities arbitration decision last month in which he sought $30 million in damages claiming that the company ruined his career.

The three-person Financial Industry Regulatory Authority Inc. panel on Oct. 24 denied the claims of the broker, James E. "Jeb" Bashaw, who was fired from LPL in 2014 and sued the firm and its former CEO, Mark Casady, two years later.

Mr. Bashaw and his firm, Jeb & Co., alleged that "LPL commenced an audit in furtherance of its plan to raid JebCo's employees, steal Bashaw's clients, and to destroy his career," according to the arbitration decision. Mr. Bashaw also claimed defamation, intentional infliction of emotional distress, raiding and other allegations.

While Mr. Bashaw's claims were denied, LPL did not escape the matter completely unscathed. The arbitration panel ordered LPL to pay Mr. Bashaw $25,000 in legal fees because it failed to produce documents as ordered or show good cause for not producing the documents, according to the decision.

A spokesman for LPL, Jeff Mochal, said that "LPL is pleased with the decision of the independent arbitrators and happy to have this matter resolved."

Mr. Bashaw, who is now registered with International Assets Advisory, said he was traveling and did not comment. Mr. Casady did not respond to requests to comment made through social media.

SPLIT DECISIONS

One unusual aspect of the decision was that two of the three arbitrators split their decisions, both agreeing and not agreeing with the panel's decision.

The presiding chair, Brian J. Tagtmeier, signed off on the decision saying he was "concurring as to the panel's decision on the motion for sanctions" and "dissenting as to the panel's decision on the merits."

Another arbitrator, Alan M. Holzberg, signed the decision saying he was "concurring as to the panel's decision on the merits; dissenting as to the panel's decision on the motion for sanctions."

As is typical with the overwhelming majority of Finra arbitration decisions, the panel gave no explanation for its decision or why two members split their decisions.

In September 2014, LPL Financial axed Mr. Bashaw, for three reasons, according to his BrokerCheck report: participating in private securities transactions without written disclosure or approval; engaging in a business transaction without written disclosure or approval; and borrowing money from a client.

On BrokerCheck, Mr. Bashaw responded by saying he contested the "accuracy, validity and motive" for LPL terminating his employment.

Mr. Bashaw was a star broker in Houston; in 2011, Barron's magazine ranked him the top financial adviser in Texas, with total assets of $3.8 billion. Industry sources at the time said he had a total of about two dozen advisers working under him in various offices.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Why broker-dealers are on a roll

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss last year's bounce-back for IBDs.

Latest news & opinion

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule may give RIAs leg up over broker-dealers

Experts say advisers will be able to point to their role as fiduciaries as a differentiator in the advice market.

Brokers accept proposed SEC rule on who can call themselves an adviser

Some say the rule will clear up investor confusion, but others say the SEC didn't go far enough.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print