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Robert Lorelli v. First Union Securities (now known as Wachovia Securities, Inc.) - 5/20/2003

Award Amount- $223,627.00

Case Summary: We commenced this arbitration on behalf of Robert Lorelli after First Union had terminated Mr. Lorelli's employment and then filed damaging and false information on his registration license, the Form U-5 Termination of Registration form. Following First Union's false U-5 filing, Mr. Lorelli was unable to find a job requiring a securities registration. The principal claim asserted was one for defamation based on the U-5, and we sought a complete expungement of the damaging and false information. Prior to, and throughout the arbitration hearing, First Union had contended that it was fully justified in filing the damaging information on Mr. Lorelli's securities record, relying on an audit prepared by its compliance department, and conclusions reached by senior management, including the CEO and president of First Union Brokerage Services, Dwight Moody. Our presentation at hearing included our examination of a number of hostile witnesses, including: Mr. Moody; Michael Roach, Mr. Lorelli's supervisor; Sherran Beshears, the regional compliance analyst who prepared the internal audit; Pat Haney, the associate director of compliance; and Rachel Raemore, First Union's head of compliance. We established at hearing that First Union did not terminate Mr. Lorelli's employment due to the internal audit or the supposed results from that audit. Instead, as the arbitration panel eventually recognized, the firm had fired Mr. Lorelli due to a conflict between Mr. Lorelli and his supervisor, Mr. Roach, which followed Mr. Lorelli's complaints about Mr. Roach's handling of a commission issue between Mr. Lorelli and a broker at another First Union branch. On May 20, 2003, the arbitration panel found First Union liable for defamation. Although the panel awarded Mr. Lorelli only nominal damages upon the defamation claim, the panel fully expunged Mr. Lorelli's U-5 form, awarded Mr. Lorelli $223,626.25 in attorneys' fees and costs, and assessed against First Union all $22,800 of the NYSE forum fees. First Union (now Wachovia) is apparently not pleased with this result, which was tried in Charlotte, where First Union maintained its corporate headquarters. Wachovia sought to overturn the award in the Superior Court of North Carolina. By Order dated October 6, 2003, the Superior Court denied Wachovia's motion to vacate the panel's award. On February 1, 2005, the North Carolina Court of Appeals affirmed the lower court's order confirming the award. Click here to read the appellate court's decision in First Union v. Lorelli.

 

Lawyer(s):
James R. Hubbard


Web Info(URL)
www.nyse.com/pdfs/2001-008918.pdf




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