A former Barclays broker agreed to pay the firm $450,000 in a settlement his attorney says displays the effects of an investigation into overbilling by the firm.

A FINRA panel earlier this month found Marc Karetsky liable for the stipulated award after Barclays accused him of a breach of promissory note, according to a copy of the decision. The firm had sought $625,000 from Karetsky plus interest and fees, but the two sides agreed to the settlement in late May.

FINRA arbitration stats through May 2017

The deal pushed arbitration winnings this year by Barclays, which sold its U.S. wealth management division to Stifel in 2015, above $1.1 million. Karetsky’s partner at his current firm, Morgan Stanley, must pay Barclays $221,000; another adviser has to pay the firm $461,000.

On the other hand, a fourth ex-Barclays broker won dismissal of the firm’s $1 million FINRA arbitration award in federal court. The British bank also agreed to pay $97 million in May after the SEC accused Barclays of collecting excess fees for mutual funds and due diligence it never performed.

“They are very concerned about how these failures will have an impact on these loan cases where [wealth] managers were compelled to move before they went to Stifel or elsewhere,” says Karetsky’s lawyer, Jonathan Sack of New York-based Sack & Sack.

Karetsky “never would have imagined that they would have shut the business down without warning or explanation” when he signed the promissory note upon starting employment at Barclays back in 2008, Sack added.

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CLAWBACK TRACK RECORD
A spokeswoman for Barclays declined to comment, as did the lawyer who represented the firm in the case.

Karetsky, contacted at the New York City offices of his Morgan Stanley Private Wealth Management practice, didn’t respond to requests for comment. His partner, fellow ex-Barclays broker Sylvia Gort, sought $1 million for breach of contract, retaliation and violations of labor law from the firm in arbitration, only to have Barclays win a $221,000 clawback in April.

Barclays filed its claim against Karetsky in January 2016, five months after he left the firm, according to BrokerCheck. Karetsky denied the firm’s allegations and accused Barclays in a separate filing of breach of contract and a violation of New York labor laws, among other allegations.

In its June 14 decision approving the settlement, the New York City arbitration panel denied Karetsky’s counterclaim. In a case the following day, a FINRA panel in Boston approved a confidential settlement between Barclays and another former broker the firm accused of an unpaid promissory note.

About 100 of Barclays’ 180 brokers joined Stifel after the acquisition, and Barclays continues pursuing unpaid loan claims in arbitration against brokers who exited for other companies. Firms win all the damages they request in nearly 90% of promissory note cases, a 2015 study found.

Karetsky and his lawyer opted for the settlement in light of that track record and his new post at Morgan Stanley, Sack says.

“We cut the deal,” he says. “He’s up and running and moving on with his life.”

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