In an arbitration award ranking among the highest in recent history, three independent arbitrators appointed by the American Arbitration Association awarded Russell Grigsby of Austin, Texas, approximately $44 million against ProTrader Group, formerly one of the most well-known securities day trading firms in the nation. The award also assessed the damages jointly andseverally against David R. Burch, David G. Jamail, Andrew S. Kershner, and John A. McEntire, who were Mr. Grigsby’s former partners and the other co-owners of ProTrader.
“We believe the Panel’s substantial award to Mr. Grigsby is consistent with the heightened demand for corporate accountability and gives notice to those who control privately held companies that they must treat their former partners fairly and disclose all pertinent facts when buying them out,” said co-lead counsel, Ben C. Broocks.
Mr. Grigsby was represented by Mr. Broocks of the Austin office of Jackson Walker L.L.P. and his trial team from the firm, Stacy Allen, Larry Waks, Vic Thomas, and Daniel Scardino. Mr. Grigsby was also represented by Mikal C. Watts and Doug Allison of Corpus Christi, Texas. Mr. Grigsby had filed suit regarding the circumstances under which he alleged he was ousted from ProTrader, a company he had co-founded, and over which he had served as chairman during the time when its revenues grew to approximately $70 million a year.
Mr. Grigsby claimed that ProTrader had begun sales discussions with Instinet Group, Inc., at a time when the defendants were positioning to oust Mr. Grigsby. Mr. Grigsby’s complaint alleged, among other things, that the existence, nature and extent of the sales discussions with Instinet were not disclosed to him. ProTrader was ultimately sold to Instinet for approximately$150,000,000 in cash and Instinet stock. Reuters owns a majority interest in Instinet, a company that provides electronic solutions for securities traders.
“I believe this award is a complete vindication of not only Russell Grigsby, but also of the public policy behind the securities laws and laws governing fiduciary relationships; it underscores the requirement that there be honest and fair self-governance and full disclosure among partners,” said Mr. Broocks.
“We are extremely pleased with this award. This award makes a firm statement that compliance with the securities laws of our nation and state should be taken very seriously by those who owe the duties,” said co-lead counsel, Mr. Watts.
Mr. Allison said that: “We are extremely gratified by the Panel’s substantial award which rights what we believe are the wrongs inflicted on Russell Grigsby by his former partners.”