Schwab and Charles Goldman agree to arbitration

The Charles Schwab Corp. and Charles Goldman have agreed to meet with a private mediator next month to discuss the former executive vice president's demand for $736,000 in severance pay following his dismissal in 2008 as head of the firm's RIA business.

The Charles Schwab Corp. and Charles Goldman have agreed to meet with a private mediator next month to discuss the former executive vice president’s demand for $736,000 in severance pay following his dismissal in 2008 as head of the firm’s RIA business.

The attempt to find an out-of-court resolution follows a federal judge’s ruling Aug. 3 in San Francisco that was a mixed victory for both parties, according to Russ Leibson, a lawyer who is representing Mr. Goldman.

Schwab spokesman Greg Gable declined to comment.

The judge upheld two of Schwab’s motions and denied one.

Mr. Goldman, who sued for his benefits in April, can’t claim that Schwab wrongfully interfered with his rights under the Employee Retirement Income Security Act of 1974, because he agreed that he was initially fired in a companywide “streamlining” that gave him access to the benefits, U.S. District Court Judge Maxine Chesney ruled.

Schwab later denied his benefits, a decision it attributed to violations of company expense and travel policies. Mr. Goldman contends that that was in retaliation for his decision to join Fidelity Investments to run its registered investment adviser and correspondent-clearing businesses.

Ms. Chesney’s Aug. 3 ruling also said that he can’t cite arbitration awards made to other ex-employees in non-ERISA cases as evidence of bias and “gross negligence” within Schwab’s human-resources department. Mr. Goldman’s lawsuit cited a $1.5 million punitive payment that a Financial Industry Regulatory Authority Inc. arbitration panel awarded a former cashier at a Schwab branch in Orlando, Fla., this year.

But the judge ruled that he can press his claim that Schwab is subject to statutory penalties under ERISA for allegedly withholding documents and other records used by its review panel in deciding to deny his benefits.

Mr. Leibson noted that a footnote in the ruling said that examples of arbitration rulings in non-ERISA fraud cases might be cited in potential appeals of her decision.

“Schwab will try to oppose discovery, but the footnote pretty much opens the door to me to find out about other employees,” he said.

As part of the wrongful-interference claim that the judge denied, Mr. Goldman sought to require Jay Allen, head of Schwab’s HR and management committee, to step down for five years as administrator of the company’s retirement plan. Mr. Allen sat on the plan committee that denied Mr. Goldman’s benefits.

Mr. Leibson said that he is cautiously optimistic that the two sides will make progress in their meeting next month with Charles Legge, a former federal judge in California’s Northern District who is now an arbitrator with JAMS Arbitration and Mediation Services. But Mr. Leibson also said that he is moving ahead with a full-blown prosecution of Mr. Goldman’s claims.

“They won some skirmishes, but in the grand scheme of things, the claim that they wrongfully denied Charles’ benefits is untouched,” Mr. Leibson said.

E-mail Jed Horowitz at [email protected].