London Stock Exchange inter-dealer broker trader Tullett Prebon Plc (LON:TLPR) has just announced that it has reached a legal settlement in a case against BGC Partners Inc. (NASDAQ:BGCP) at the New Jersey Superior Court regarding “the raid on the company’s business by BGC in the second half of 2009.”
The legal case involves a “client poaching campaign” by a former senior executive after his abrupt exit from the firm. Tullett Prebon alleged claims of racketeering, unfair competition, misappropriation of confidential information and trade secrets, and tortious interference (intentional interference with contractual relations) on the part of BGC.
The broker has today entered into an agreement with BGC under which BGC will pay $100 million to Tullett Prebon to settle the litigation in the New Jersey Superior Court.
The settlement agreement also settles all other outstanding litigation between the parties, which will now be dismissed. It also includes a clause that prevents either party from hiring desk-heads and senior management from the other for one year as of the agreement date.
The $100 million settlement is in addition to $33.3 million awarded to Tullett Prebon’s subsidiaries in the US following the conclusion of a Financial Industry Regulatory Authority (FINRA) arbitration, which was announced in July 2014.
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Tullett Prebon says it has a duty to shareholders to protect its legal rights and interests, and although legal action can be uncertain, protracted and expensive, it believes it is appropriate to take action in order to do so.
The firm notified its investors that this legal activity will be recognized in the 2014 financial statements as an “exceptional item” and is expected to be a net credit of £3.1 million. This figure does not include the $100 million settlement.
A BGC spokesperson Hannah Sloane responded: “This settlement is a fraction of the amount Tullett Prebon plc originally claimed, which was in excess of $1 billion. Ten days ago the judge threw out Tullett’s RICO claim, noting that Tullett had not produced enough evidence on its claims. We have reached a settlement that resolves ten outstanding lawsuits involving the two companies.
In addition, we and Tullett have agreed not to hire each other’s senior employees including desk heads for a period of one year, including employees of GFI Group Inc. upon the closing of the pending BGC Partners tender offer. We are pleased to put these cases behind us and no longer spend tens of millions in legal fees. Due to this reduction in ongoing legal expense we expect this to have a positive impact on our distributable earnings going forward. We expect this settlement to have no impact on our proposed acquisition of GFI Group Inc. We remain focused on delivering outstanding services to our valued customers.”
This article has been updated since initial publication.