Ex-Citi broker says he was wrongfully terminated, wins $4M arbitration award
Citi's former top broker in Miami has won a near $4 million arbitration award from the bank for concocting what he claimed was a plot to take his $200 million book of business.
Citi was worried that Christian Gherardi would "walk out the door" with his large book after the OCC imposed a moratorium on the bank forbidding it from opening any new brokerage accounts until it cleaned up deficiencies in its anti-money laundering program, said Gherardi's lawyer, Ethan Brecher of New York.
Citi feared that the moratorium would cause Gherardi and other brokers to leave because they would not be able to pursue new business, Brecher said.
Gherardi had been with Citi for almost 20 years and had 500 to 600 clients, the majority of them from Brazil. He generated about $2 million in commissions annually.
Prompted by fears that he'd leave, Citi distorted incidents that Gherardi had had with two other brokers in an effort to terminate him and take his book of business, Brecher argued during the hearing.
Soon after the moratorium was imposed in October 2015, Citi convened a disciplinary committee to review Gherardi's run-ins with colleagues, according to Brecher. One involved a broker who claimed that Gherardi threatened him in the lobby of a Citi building for attempting to poach one of his clients. The other involved a broker who alleged that Gherardi cursed and screamed at him for unwittingly approaching one of his clients. He also accused Gherardi of yelling at the client that the broker allegedly was trying to steal.
Brecher contended that both incidents were mischaracterized. In the first incident, a manager testified that he could not determine whether threats had been made, and in the second, the client refuted claims that he had been yelled at and that Gherardi had always acted professionally. The second broker also recanted part of his story during the hearing.
"They poisoned the disciplinary committee with lies," Brecher said. "We showed at the hearing that these two incidents with these two brokers were completely bogus."
Gherardi was fired in December 2015 after the disciplinary committee signed off on his termination. He was subsequently unable to find employment at a wirehouse and wound up at a small retail firm called Bulltick in Miami.
The wrongful termination and black mark on his U5 saying that he was discharged for business decorum issues "badly damaged his reputation," Brecher said.
After firing Gherardi, Citi redistributed his book of business with "a bunch of brokers," with 60% going to a "very junior broker who was paid at a significantly lower payout than Gherardi was getting," according to Brecher.
The FINRA arbitrators ordered Citi to pay Gherardi $3.5 million in compensatory damages for the wrongful termination. They also ordered the bank to pay him $150,000 for lost quarter trailers and $396,000 for deferred compensation, along with interest on both.
In addition, the hearing panel recommended that Gherardi's U5 be amended to show that he was terminated without cause.
"Christian was completely vindicated," Brecher said.
Citi criticized the panel's ruling. “The arbitration award is contrary to both the facts and the law and we are considering all options," said Drew Benson, a spokesman for Citi.