Cantor Fitzgerald Faces Legal Challenge: Investment Bankers Seek to Overturn $4M Arbitration Award

November 30, 2023

National investment loss lawyers KlaymanToskes reports four former investment bankers, including Kevin Phillips, former co-head of Cantor’s power, energy, and infrastructure group, have initiated legal action to challenge an arbitration award of nearly $4 million secured by Cantor Fitzgerald LP. The plaintiffs, John Bills, Schuyler Fabian, Robert Kavanagh, and Kevin Phillips contend that the Financial Industry Regulatory Authority’s (“FINRA”) decision, issued on October 31, which ordered them to repay forgivable loans to Cantor, failed to consider breaches of contract by the firm itself.

The legal dispute dates back to November 2021, when Cantor initiated arbitration proceedings against the four individuals following their departure to establish boutique investment bank PEI Global Partners LLC. Cantor claimed that their departure violated agreements signed when they joined the firm in 2017, as part of a group recruited from Jefferies Financial Group Inc., seeking approximately $24 million in damages.

While the FINRA panel ruled largely in favor of the former bankers, except for the repayment of promissory notes linked to their 2017 recruitment deals, the plaintiffs argue that the decision should be set aside due to Cantor’s contractual breaches, including attempting to shift the costs of a settlement with Jefferies onto them.

The representatives were part of a broader recruitment effort by Cantor from Jefferies, aimed at expanding the firm’s underwriting and advisory services. The power, energy, and infrastructure team they formed achieved notable success, as claimed in the lawsuit. Despite their achievements, Cantor allegedly reneged on promises made to the group, implementing changes to revenue-sharing formulas and revenue recognition that significantly impacted their expected bonuses.

Furthermore, the plaintiffs argue that Cantor breached its pledge to indemnify them against legal claims, particularly those related to their departure from Jefferies. After a settlement was reached in principle with Jefferies, Cantor allegedly attempted to renegotiate the indemnification agreements, placing the financial burden of the settlement on Phillips and the other plaintiffs. When they objected, Cantor repudiated the indemnification agreement and excluded them from its settlement with Jefferies. As a result of FINRA’s ruling, Phillips was ordered to repay $3.1 million to Cantor, Bills $379,000, Fabian $283,000, and Kavanagh $115,000.

About KlaymanToskes

KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered more than $250 million for investors in FINRA arbitrations and over $350 million in other securities litigation matters for its clients. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.


KlaymanToskes, P.A.

Lawrence L. Klayman, Esq.