HSBC Securities USA, the U.S. investment banking arm of the British banking giant, is facing a possible suspension from the securities business for failing to pay the roughly $2,000 remaining from a $150,000 arbitration award, according to Corporate Financing Week, a sister publication. The arbitration award is owed to Ed LaScala, a former managing director in the firm's corporate bond syndicate group. Kenneth Kelly, a senior partner at Epstein Becker & Green, which is representing HSBC, says the additional $2,000 comes from a stock dividend that kicked in during the course of the litigation. He adds HSBC intends to make the payment promptly.
Alan Sklover, LaScala's attorney and a partner at Sklover & Associates, said Carol Sherman, a Los Angeles-based attorney in the NASD's enforcement unit, told him that the regulator is investigating HSBC prior to a hearing that will be held to determine whether the firm should be suspended from the association (which would effectively ban it from doing any business in the U.S.). Sherman did not return repeated calls. Nancy Condon, an NASD spokeswoman, said she is not aware of the matter and would not comment even if she were.
According to a Nov. 24 letter sent by NASD Dispute Resolution to Lourdes Smart, an HSBC attorney, the firm will be suspended from the association this Friday unless it pays the award or files a motion to have it vacated or modified by a court. Sklover said Sherman told him the deadline has been waived and the suspension will be held in abeyance pending the outcome of the hearing.
Sklover said he believes HSBC is not paying the balance of the award due to, "malice and spite--they want to be known as people who do not take kindly to people who make claims against them. They will make it as difficult and expensive as possible. Their attitude is, 'We owe you $2,000? Well, start an arbitration, then.'"
LaScala worked at HSBC for 18 months, ending in February of last year. His claim against HSBC was for the firm's alleged failure to pay compensation he claims was guaranteed to him. LaScala was part of a mass exodus from the firm's corporate bond group last year, which by May of last year came to include the unit's entire origination desk except for one associate. LaScala referred questions regarding the outstanding payment to Sklover.
