Finra arbitrators have ordered a securities analyst who claims he was wrongfully fired by Rodman & Renshaw LLC in 2006 for attempting to lower a stock rating to pay the broker-dealer $10.7 million in damages.
Former Rodman biotech analyst Matthew N. Murray told the Senate Finance Committee that in March 2006 he was terminated after he tried to downgrade the stock of a company that was an investment banking client of the firm, according to a report in The New York Times.
Rodman & Renshaw responded by suing Mr. Murray, alleging that he had defamed the firm and interfered with its business; the claim then went into arbitration. The Securities and Exchange Commission launched an investigation into Rodman in 2006 and later recommended no action against the firm.
David Katz, Mr. Murray's attorney, said the three Finra arbitrators “rubber-stamped what Rodman had asked for.” Mr. Katz said he plans to appeal the decision.
Edward Rubin, chief executive of Rodman & Renshaw
Capital Group Inc., the broker-dealer's parent company, did not return a phone call seeking comment.
Conflicts at securities firms between research analysts who rate securities and investment bankers are not uncommon on Wall Street. Following the crash in technology and telecom stocks, major financial institutions in 2002 entered into a global settlement with the SEC, NASD (now the
Financial Industry Regulatory Authority Inc.) and the
New York Stock Exchange that sanctioned brokerage firms for punishing analysts who publish negative reports about companies they follow.
According to the Times report, Mr. Murray claimed that Rodman fired him after he tried to downgrade shares of a biopharmaceutical company whose stock price had exceeded Mr. Murray's target price. Rodman & Renshaw never published Mr. Murray's report, the Times reported.
Rodman & Renshaw is a publicly traded boutique investment bank that focuses on start-up companies. The chairman of Rodman & Renshaw is Wesley K. Clark, a retired U.S. Army general who briefly sought the Democratic presidential nomination in 2004.
Mr. Murray, who worked for Rodman in 2005 and 2006, no longer works for a brokerage firm, according to his record with Finra's Broker-Check system. As part of the litigation, he had asked for damages totaling $4 million; the three arbitrators denied his claim, according to the award published Aug. 26.
As is typical in Finra arbitration claims, the panelists gave no explanation for the award. Mr. Katz said the $10.7 million award was the amount Rodman & Renshaw claimed it lost in delaying a private placement due to the negative publicity from the dispute.
The arbitration process was lengthy, beginning in August 2007 and ending this March — totaling 61 sessions.
Rodman & Renshaw had sought $15 million in punitive damages, but was denied, according to the award.
E-mail Bruce Kelly at [email protected].
