October 13, 2021

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A veteran New York City broker ordered in June to pay his former employer $457,000 in a promissory note dispute has taken the unusual step of asking a court to overturn the award.

Barney Greengrass, an Aegis Capital Corp.-registered broker who left J.P. Morgan Securities in 2018, filed a petition on July 13 in New York Superior Court claiming that the award was procured “by the undue means of perjured testimony,” according to the petition. He is also seeking to revive a $13 million counter-claim the panel denied that involved a large client that a colleague allegedly poached.

J.P. Morgan meanwhile claims that the filing is another legal ruse that Greengrass is using to avoid paying back the note. In a Sept. 21-filed memorandum, the bank said the broker has made “every effort” to avoid repaying the note since his resignation and claimed that he now seeks to have a court vacate the award “simply because he is dissatisfied with the outcome” of the arbitration.

A full three-person panel of Finra arbitrators on June 15 denied Greengrass’ “unjust enrichment” claim in which he accused another J.P. Morgan employee of pushing his most lucrative retail client, a hedge fund customer, into the firm’s institutional business. The two non-industry panelists also ruled in favor of J.P. Morgan’s counterclaim for an outstanding note balance, ordering Greengrass to repay more than $457,000 plus interest.

Greengrass’ argument centered on the allegation that Dan Antonelli, head of global equity sales at J.P. Morgan Securities in March of 2016 stole his largest client, Stuart Zimmer, a principal of hedge fund Zimmer Partners. Greengrass and his New York-based lawyer, Ethan A. Brecher, had said the firm also denied him an opportunity to co-cover the account despite the client’s wishes.

A memorandum Greengrass filed in support of his motion to vacate leans on the argument that Zimmer “forcefully and repeatedly” testified that he had not approved the transfer of his account away from Greengrass. Greengrass said Antonelli falsely testified that J.P. Morgan Securities does not try to convince or poach business from other parts of the bank and that there was “not a chance” that the transfer could have occurred without Zimmer’s “approval and acquiescence.”

“We ended up with a very adverse outcome in arbitration, but Zimmer was clear and unequivocal in contradicting J.P. Morgan’s head of institutional sales,” Brecher said in an interview. “Antonelli testified that Zimmer had asked for Barney to be taken off the account, but Zimmer testified he did not want Barney taken off the account. He was happy with Barney.”

A J.P. Morgan Spokeswoman declined to comment beyond the filing.

Greengrass is also seeking to undo the award on procedural grounds that J.P. Morgan Securities lacked standing to bring a claim for breach of the note as it had been issued by a different business unit, JPMorgan Chase.

Motions to vacate are rare because courts are highly deferential to arbitrator rulings and have only four limited grounds to overturn an award under the Federal Arbitration Act, lawyers say.

But in this case, one of the Finra panelists, an industry arbitrator, had dissented specifically on the portion of the award dealing with the note repayment, agreeing with Greengrass’ position that J.P. Morgan lacked the “standing to assert the claim on the promissory note.”

Greengrass, who is also a scion of the founder of the famous Jewish deli of the same name on Manhattan’s Upper West Side, has 40 years in the industry and a career spanning seven firms. The notes dispute with J.P. Morgan is not his first.

In 2013, he and Brecher were successful in fending off a $1.1 million lawsuit from Morgan Stanley, seeking repayment of notes after Greengrass’ move in 2010 to J.P. Morgan Securities.

The wirehouse had claimed Greengrass owed roughly $940,550 plus interest because he left the firm before fulfilling the terms of his 2005 signing bonus. Greengrass countered, saying the firm didn’t make good on a promise that his large institutional accounts would be provided with the same preferential margin interest rates and margin collateral levels they enjoyed while at Smith Barney, his former employer.

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