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Acting as his own attorney, adviser gets $100K relief on bonus clawback

A former Barclays broker lost his FINRA arbitration case but won a $100,000 reduction of his clawback in a rare positive outcome for an adviser representing himself.

Matthew Grady must pay Barclays a net $461,000 in damages and taxes after cutting out the damages due to him from his former employer, an arbitration panel in Boston ruled last week, according to a copy of the award. In an entire year of FINRA promissory note cases tracked by one expert, not one adviser was as successful as Grady.

Stocks and Puerto Rican bonds are the focus of many cases among clients, advisers and firms.
March 10

Barclays head offices London Bloomberg News March 2017
Signage shines through a window reflecting Barclays Plc head offices at the Canary Wharf business, financial and shopping district in London, U.K., on Tuesday, March 21, 2017. Barclays is considering Dublin for their EU base to ensure continued access to the single market, said people familiar with the plans,asking not to be named because the plans aren't public. Photographer: Luke MacGregor/Bloomberg

The broker responded to Barclays’ June 2015 claim of breach of promissory note by asking the arbitrators for lost compensation and other damages relating to a “breach of the covenant of good faith and fair dealing” by the firm, according to the award. He also sought interest, costs and attorney fees.

The March 29 decision awarded damages of $514,285 and a withholding tax refund of $46,825 to Barclays, which sold its U.S. wealth management unit to Stifel in December 2015. The arbitrators subtracted $100,000 in compensatory damages for Grady from his final penalty. As is typical, the arbitrators did not explain their decision.

A spokeswoman for Barclays and the lawyer who represented the British bank both declined to comment on the case.

Grady, who left Barclays in February 2015 and now owns a Boston RIA called Millstone Wealth Partners, also declined to discuss the case.

Barclays sought over $638,000 plus interest from Grady. Yet he argued in his September 2015 counterclaim that the company’s actions had either discharged his obligations under the promissory note or cost him at least as much money as the outstanding balance on the loan.

While the nature of his claims against the firm was not immediately clear, the reduction in Barclays’ clawback certainly sets Grady apart from other advisers who have appeared “pro se,” or representing themselves.

Firms won the entire principal amount of the promissory note from advisers appearing pro se in all 19 claims that ended in a decision rather than a settlement in 2015, according to researcher and mediator Dana Pescosolido. Companies won the principal back in 88% of promissory note claims overall that year.

Stifel inherited roughly 100 of Barclays’ 180 advisers, with the remainder opting to bolt for other firms. Yet Barclays has continued trying to claw back bonuses from advisers. However, the bank suffered a setback earlier this month in another clawback bid. A federal judge vacated a $1 million award against an ex-wealth manager, ruling that the FINRA panel who awarded it to Barclays had stepped outside its authority.

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