Empire strikes out, as claims against Penson dismissed

Empire Financial Group Inc., a former unit of Jesup & Lamont Inc., was ordered by an arbitration panel last week to pay Penson Financial Services Inc. $750,000 in attorneys’ fees, plus other costs.
The award itself doesn’t specify the total amount Empire owes, but a spokesman for Penson said the total award came to $2.4 million.
Separately, on June 18, the Financial Industry Regulatory Authority Inc. said Jesup was out of compliance with net-capital requirements and ordered the firm to limit trades to liquidating transactions only.
It’s unclear if the arbitration award contributed to Jesup’s net-cap difficulty.
The award, signed last Friday by a three-person panel, dismissed all claims made by Empire, which closed its doors in 2008. Empire had alleged that Penson conspired to put it out of business, extorted money from the firm and withheld commissions.
Penson was Empire’s clearing firm.
The panel ordered Empire to pay Penson’s legal bill plus other costs, and allowed Penson to keep Empire’s clearing deposits.
All told, the value of the award comes to $2.4 million, said Penson spokesman Gary Fishman.
The decision ends a hotly debated dispute in which Jesup and Empire also accused Penson of using Finra to help shut down Empire. In addition, the now-defunct firm claimed a Penson correspondent firm raided Empire’s profitable trading desk.
In an unusual action during the arbitration proceeding, the Finra panel ordered Finra officials to produce internal documents related to the regulator’s oversight of Empire. Finra refused, citing legal privilege.
Last March, a federal court in Texas ruled against Jesup’s effort to compel production of the Finra documents.
“We are pleased with the decision, in particular that the Finra panel concluded there was no basis in fact for any of Empire’s claims,” said Daniel Son, Penson president.
Todd Zuckerbrod, Jesup’s general counsel, was not available for comment.