A Finra arbitration panel has ordered First Command Financial Planning to pay $1.1 million in deferred compensation to a group of eight advisors and staff who left the firm in May 2012.
The panel also criticized First Command for filing U5 termination forms saying the reps were let go for wrongdoing, and ordered their disciplinary records be changed to indicate they left voluntarily. “The Forms U5 are misleading and defamatory in that they would lead a third party to conclude that the [brokers] were terminated by First Command Planning, when in fact, they terminated their employment relationships voluntarily,” said the arbitration panel in a decision last week.
The dispute erupted in 2012, when James Agostini, who managed an office for First Command in Columbia, S.C., left with his team to form an independent hybrid firm, DaVinci Financial Designs LLC, which custodies at LPL Financial. Joining Agostini at DaVinci Financial were advisors Patrick Burgess, Stan Hill, Brad Wilson, Jeb Zoller and Stephen Simmons.
Sources say the brokers butted heads with First Command management over an alleged push to sell whole life insurance. At the same time, Agostini, Zoller, Burgess and DaVinci were also ordered to pay First Command $200,000 in compensatory damages.
According the arbitration ruling, they claimed First Command “switched back to a commission sales model, hurting their business.”
First Command also went after LPL in the case. LPL counterclaimed for unspecified damages and sanctions against First Command for “abuse of process,” according to the award.
The claims of both firms were denied by the arbitration panel.
“These guys worked hard over a long time and were committed to that organization to earn that [deferred] money, so we’re pleased the panel saw fit to agree,” said Elizabeth Ann Agostini, an attorney and sister of James Agostini who represented DaVinci Financial.
Regarding the U5 forms, “it was uncalled for to do what [First Command] did” to the advisors, she said.
The brokers have asked a court in South Carolina to confirm the award, she added, while First Command has appealed the award in a Texas state court.