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Ex-Trader Files Claim Against HSBC Over Compensation, Another Set To File

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A former senior bond trader fromHSBC Securities USA has filed an NASD claim against his former employer over compensation and another senior trader will soon be filing a similar claim, according to Alan Sklover, attorney and senior partner at Sklover, Himmel & Bernstein, who is representing the traders. He declined to name the traders, citing client confidentiality.

Sklover says his clients are seeking an amount "in the seven figures." He says one had a guaranteed contract that was not honored, and that both were led to believe they would receive far greater compensation than they got. He says he is in contact with a number of ex-employees at HSBC who have similar complaints, and says he may bring further cases.

Sklover says that despite staff reductions all over Wall Street, no firm to his knowledge has been so heavy-handed. "It's not unusual in these situations that assurances and the like are made and not honored. What is unusual is the degree to which the firm awarded zero and handed out pink slips without any warning at all literally on the day that bonus checks were supposed to be distributed."

Ironically, Mike Allen, HSBC's newly hired head of corporate bond trading and research, is no stranger to arbitration himself, having won $2.6 million from Credit Suisse First Boston in 1998, after charging the firm with "failure to provide compensation for services rendered," according to a document filed with NASD Dispute Resolution. Allen, who is an attorney, also has a case pending against UBS Warburg, where he ran capital markets, syndicate and structured products in the late 1990s. Reached at his desk, Allen declined to comment.

Pamela Plehn, a spokeswoman for HSBC, says the firm does not comment on litigation, but that "based on the details" provided by BondWeek, the firm is unaware of any case pending. Of the decision to hire Allen, she says only, "Mike has joined us. He has tremendous experience in fixed income, and we're pleased he's part of our team."Kris Kagel, UBSW spokesman, says the firm does not comment on pending litigation. A call to Joe Petri, HSBC's treasurer and head of North American global markets, was not returned.

Sklover argues HSBC made a calculated bet that its former employees would be reluctant to take legal action against the firm for fear of being blackballed in a difficult job market. He reports that Gail Burlant, associate general counsel for the firm, told Sklover to "go ahead, sue us," when he contacted her to discuss a client's claims. Burlant's assistant referred calls to Plehn.

HSBC had sizeable losses on its corporate bond desk last year, followed by a number of high-level departures, including the dismissal of John Griff, former president of the U.S. unit, and former fixed-income head Ferdie Masucci. (BW, 5/6, 6/9, 8/11).

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