NASD Says Former Wachovia Broker Wrongfully Fired for Market Timing

The National Association of Securities Dealers (NASD) handed down a $4.3 million award to a former Wachovia Securities broker who was fired in 2003 amid the firestorm of market-timing allegations.

An arbitration panel accepted Frederick O’Meally’s claims that he had been wrongfully fired and that his former employer still owed him compensation from a company savings plan and from a retention bonus, according to the New York Law Journal.

O’Meally had engaged in market timing on behalf of hedge fund clients, but argued these practices were reviewed and approved by in-house counsel at Prudential Securities — and later at Wachovia after the two companies merged in 2003. His attorney argued that O’Meally did nothing contrary to policy.

The NASD panel dismissed O’Meally’s claims against Prudential and denied Wachovia’s request for damages of $323,712. The panel directed Wachovia to pay, with interest, $2.7 million to O’Meally in profit-sharing benefits and $1.6 million in retention bonuses to be paid over five years.

Admitting to “criminal wrongdoing,” Prudential settled market-timing allegations with NASD in August when it agreed to pay out $600 million in monetary sanctions. NASD said the company’s clients earned more than $162 million in profits as a result of market-timing activities and Prudential earned more than $50 million in gross commissions from the transactions.

Even though the NASD panel found Wachovia erred in its decision to fire O’Meally, he, along with three other former Prudential brokers, still face civil charges relating to market-timing activities from the Securities and Exchange Commission (SEC), according to the New York Law Journal.