A broker has been awarded about $950,000 by Finra in a case where he claimed his book of business was "stolen" from him by his business associates during a time when he was suffering from severe mental illness.
Matt Smith, 57, of Waterford, N.Y., claimed in a filing in October that his partner and co-workers at CP Capital Management of Clifton Park, N.Y., took advantage of his mental incapacitation and "coerced" him into signing documents that resulted in him giving up his book of business without any compensation.
Smith, a 25-year veteran in the securities industry, co-founded the firm in 2006 with George McAvoy, his college roommate and football teammate, the claim said, adding that he served as managing partner and was the face of the company. Matt Selig, a broker at the firm, and CP Capital office manager Richard Tomisman were also named as respondents in the claim.
Smith also accused the firm's broker-dealer, Securities America, of colluding with his three business associates to rob him of his business.
"The suggestion that Matt Smith voluntarily and suddenly gave away his entire business for no compensation whatsoever defies logic and insults the intellect," the claim said. "In March of 2022, Matt Smith was at his most vulnerable moment and the Respondents took advantage of it. George McAvoy and his eventual new business partners, Tomisman and Selig, stole Matt Smith’s entire business and livelihood."
A two-person Finra panel on December 13 sided with Smith and awarded him a total of $958,000 in compensatory damages after a three-day hearing. McAvoy was held liable for $517,320 and Selig and Tomisman were each ordered to pay Smith $172,440. Securities America was held liable for $95,800. The panel also awarded McAvoy $8,500 for a counterclaim, which reduced Smith’s award to $949,500.
“We are pleased that the FINRA arbitration panel issued a significant monetary award to our client. It was always our belief that our client’s substantial book of business was wrongly deprived from him,” his attorney Jonathan S. McCardle, of Featherstonhaugh, Wiley & Clyne in Albany, N.Y., said in an email statement to Financial Advisor.
Securities America and the partners did not respond to an inquiry for comment. Neither did Justin Heller, the attorney for McAvoy, Tomisman and Selig.
Smith said in the claim that he started experiencing mood swings and abnormal behavior in the spring of 2021 and was eventually diagnosed with "bipolar 1 disorder with multiple manic episodes with psychosis, as well as depressive and mixed episodes with experienced suicidal ideation.”
The erratic behavior led to him having his securities license suspended by Finra for failure to respond to an investigation notice and, in May 2022, led to his arrest in Saratoga County, N.Y., on charges of assault, criminal mischief and fleeing a police officer after a "thirty minute low speed [motor vehicle] police chase," the claim states.