The three-person Financial Industry Regulatory Authority Inc. panel on Oct. 24 denied the claims of the broker, James E. "Jeb" Bashaw, who was fired from LPL in 2014 and sued the firm and its former CEO, Mark Casady, two years later.
Mr. Bashaw and his firm, Jeb & Co., alleged that "LPL commenced an audit in furtherance of its plan to raid JebCo's employees, steal Bashaw's clients, and to destroy his career," according to the arbitration decision. Mr. Bashaw also claimed defamation, intentional infliction of emotional distress, raiding and other allegations.
While Mr. Bashaw's claims were denied, LPL did not escape the matter completely unscathed. The arbitration panel ordered LPL to pay Mr. Bashaw $25,000 in legal fees because it failed to produce documents as ordered or show good cause for not producing the documents, according to the decision.
A spokesman for LPL, Jeff Mochal, said that "LPL is pleased with the decision of the independent arbitrators and happy to have this matter resolved."
Mr. Bashaw, who is now registered with International Assets Advisory, said he was traveling and did not comment. Mr. Casady did not respond to requests to comment made through social media.
One unusual aspect of the decision was that two of the three arbitrators split their decisions, both agreeing and not agreeing with the panel's decision.
The presiding chair, Brian J. Tagtmeier, signed off on the decision saying he was "concurring as to the panel's decision on the motion for sanctions" and "dissenting as to the panel's decision on the merits."
Another arbitrator, Alan M. Holzberg, signed the decision saying he was "concurring as to the panel's decision on the merits; dissenting as to the panel's decision on the motion for sanctions."
As is typical with the overwhelming majority of Finra arbitration decisions, the panel gave no explanation for its decision or why two members split their decisions.
In September 2014, LPL Financial axed Mr. Bashaw, for three reasons, according to his BrokerCheck report: participating in private securities transactions without written disclosure or approval; engaging in a business transaction without written disclosure or approval; and borrowing money from a client.
On BrokerCheck, Mr. Bashaw responded by saying he contested the "accuracy, validity and motive" for LPL terminating his employment.
Mr. Bashaw was a star broker in Houston; in 2011, Barron's magazine ranked him the top financial adviser in Texas, with total assets of $3.8 billion. Industry sources at the time said he had a total of about two dozen advisers working under him in various offices.