An arbitration panel for the Financial Industry Regulatory Authority has ordered the owner of a California advisory firm to pay a total of $3.6 million in damages to two former advisors he employed.

John Valentine, head of Valentine Capital Asset Management Inc. of San Ramon, Calif., was hit with $800,000 in compensatory damages and $2.5 million in punitive damages for drumming up false customer claims against the advisors after they left his firm in September 2011.

The panel also ordered Valentine to pay the advisors, William Leitch and Corey  Casilio, $338,000 in attorney’s fees and $30,000 in sanctions and fees for Valentine’s refusal to produce documents during the case.

In addition, the arbitration award, dated June 3, directed the expungement of five customer complaints from Casilio’s disciplinary record, and six complaints from Leitch’s record, and ordered that defamatory information on the brokers’ U-5s be removed.

“I’ve never seen anything like this case, and I’ve been working in this industry a long time,” said Michael Blumenfeld, a partner at Freeman Freeman Smiley LLP in Los Angeles who represents both advisors.

Valentine said he plans to appeal the ruling.

“Everything I put on the U-5s … was true,” he said. “And to assume I can get 30 or 40 people to complain” about Leitch and Casilio and file arbitrations against them “is absolutely ridiculous.”

Leitch and Casilio settled a separate case with a number of complaining customers, Valentine said.

The brokers settled with 19 customers for “nuisance value,” Blumenfeld said.

Blumenfeld said he plans to confirm the award in court so his clients’ records can be cleansed, and obtain a judgment against Valentine to pursue the money.