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Prudential Securities v. Richard E. Kelley - 12/14/1995

Award Amount- $554,000.00

Case Summary: Richard Kelley worked as a stockbroker in Prudential's St. Louis, Missouri branch office. Prudential suspended him after he was indicted by a federal grand jury in March 1992. The U.S. Attorney in St. Louis dismissed the indictment in July 1992, and Prudential reinstated him two months later. Nonetheless, in February 1993, Prudential fired him, allegedly for failure to generate sufficient commission production. Prudential then sued Mr. Kelley to recover $61,010.93 it claimed was from a sign-on bonus that was paid in the form of a four-year forgivable loan. Mr. Kelley filed a counterclaim, alleging that he had be terminated wrongfully because he had been indicted (albeit without basis) and because of his age, and that his ability to generate commission income had been injured by Prudential's mismanagement of his client relationships during his suspension and based on its harassment of him following his reinstatement. Following a 17-day arbitration hearing in St. Louis, a NASD arbitration panel denied in full Prudential's claim, and awarded Kelley $360,000.00 in compensatory damages, $40,000.00 in punitive damages, $127,000.00 in attorneys' fees, and an additional $27,000.00 in the form of sanctions for Prudential's misconduct during the arbitration hearing in connection with its withholding and altering of documents, for a total award of $554,000.00. The panel also assessed Prudential $52,500.00 in forum fees. The case was also noteworthy because Prudential fired its counsel in the middle of the case, after it became clear that the lawyer had deliberately withheld incriminating documents.

Jeffrey L. Liddle

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