A Financial Industry Regulatory Authority panel has ordered a New York broker-dealer to pay more than $1.5 million to a former financial advisor over a commission dispute that led to claims including breach of contract and fraud.
The Finra arbitration panel awarded William Lawrence Barkow a total of $1,554,242.50 plus interest in damages from Joseph Gunnar & Co. after he claimed the firm refused to pay him commissions and carried interest and profit participation he was owed after being wrongfully terminated, the filing said.
In the January 2020 filing, which was amended in April 2020, Barkow accused Joseph Gunnar & Co. of breach of contract, violations of Article 6 of the New York Labor Law, unjust enrichment, breach of implied covenant of good faith and fair dealing, and fraud.
At the hearing, Barkow had sought $7,555,480.86 in damages against the firm, as well as its CEO, Joseph Anthony Alagna Jr., and President Stephan A. Stein, both of whom Barkow reported to.
That amount included compensatory damages of $1.3 million and punitive damages of $4 million and a declaration that the “claimant is entitled to all commissions earned for liquidity events both before and after termination.”
While the panel denied claims against Alagna and Stein personally, it found Joseph Gunnar & Co. liable for the total of various sums owed Barkow over different periods of his employment, which came out to more tthan $1.5 million.
The filing said Barkow was a pioneer in the secondary markets and was hired to create, develop and manage Joseph Gunnar & Co.’s secondary market business. It said through more than 25 individually branded Regulation D offerings, Barkow has been instrumental in raising more than $500 million into more than 30 different companies via hundreds of individually sourced and executed secondary market purchases. It also noted that he has worked on transactions for recognized names such as Facebook, Twitter, LinkedIn, Palantir, Spotify, Lyft and DocuSign.
Regulation D allows exemptions from some SEC registration requirements for securities offerings.
Barkow worked for the company for seven years, beginning in 2011, and generated tens of millions of dollars in commissions and fees for it, the filing said.
It also noted that in June 2017, he and three others were found jointly and severally liable on a guarantee of promissory note for more than $6 million. “The judgment was immediately disclosed to [Joseph Gunnar & Co.] and was publicly reported on Mr. Barkow’s Finra BrokerCheck in June 2017,” the filing said.
A little more than a year after the disclosure, however, in August 2018, the filing said Barkow was given an ultimatum by Alagna and Stein “to resign or be fired and risk having his Form U-5 marked negatively and thus harming Mr. Barkow’s career.” The filing further noted that even though Barkow’s employment agreement and statutory definition states that he was an employee, Alagna, “falsely represented and told Mr. Barkow that he was an independent contractor.” This would allow for 100% of his earnings to be subject to garnishment rather than the 10% above minimum wage for an employee, the filing said. “Therefore, [the] respondents decided that it would simply not pay him anything because any pay would have to be surrendered in its entirety to his creditor.”
After unsuccessful attempts to resolve the situation, Barkow was terminated, the filing said. “Although [Joseph Gunnar & Co.’s] report on his Form U-5 indicates that the reason for the end of his employment was “voluntary resignation,” Mr. Barkow’s August 2018 separation from [the company] was not voluntary,” the filing said. It added that this action by the company was an excuse to simply retain all of the money accrued and owed Barkow as well as those coming due to him. “This appears to be the true impetus for Mr. Barkow’s termination. As a result of these improper actions and the pretextual termination, [the] respondents stand to make millions of dollars from Mr. Barkow’s efforts.”
Barkow’s attorney, Richard Roth of the Roth Law Firm in New York, said the case was hard fought but he is pleased with the result. He noted that he did not draft the statement of filing. “But the bottom line is I came in for a purpose and succeeded, so everyone is happy,” he said.
“The award sort of sets forth accurately what was sought and we’re very happy,” Roth added. “Joe Alagna once again got dinged, so I am happy about that,” Roth said, adding that he’d won other awards against Alagna. “While he didn’t personally get hit, his firm did. It’s a nice chunk of money. So, I am very happy.”
Joseph Gunnar & Co. had requested that the panel dismiss the claims. Alagna and the attorneys who represented his firm, Angela A. Turiano and Andrew Sidman of the New York firm Bressler, Amery & Ross P.C., did not respond to a request for comment.
Barkow, who started in the industry in 1996 with Sands Brothers & Co., Ltd., worked for several other firms, including two that were expelled by Finra, before joining Joseph Gunnar, according to BrokerCheck. He has been registered with New York brokerage firm VNTR Securities LLC since 2018.