Arbitrators: Cavner owes U.S. Bancorp $325,000

On Oct. 18, a National Association of Securities Dealers arbitration panel ordered The Signature Bank financial adviser to pay her former employer, U.S. Bancorp Investments Inc., $325,000 in compensatory damages.

That decree is separate from an active federal lawsuit between the two parties, which will be addressed in a March jury trial.

Cavner and four other former U.S. Bancorp employees left U.S. Bancorp Investments for The Signature Bank in September 2005. Days later, U.S. Bancorp alleged in a lawsuit that the defendants illegally used confidential client lists – photocopied on rented copiers during the summer of 2005 by interns and staff at off-site locations – to solicit business away from U.S. Bancorp. The suit also says The Signature Bank had knowledge of these actions.

U.S. Bancorp last September filed the suit on behalf of its brokerage subsidiary, U.S. Bancorp Investments, but added its banking subsidiary, U.S. Bank National Association, to the suit in June because it said the defendants’ actions caused a loss in bank-side business, too.

In total, U.S. Bancorp is seeking $18 million in compensatory and punitive damages, said Jay Dade, an attorney with Shughart Thomson & Kilroy, which represents U.S. Bancorp.

Cavner and her attorney are using that figure to argue that U.S. Bancorp failed in NASD arbitration.

They say the panel only awarded $347,000 – co-defendant Steven Clark was ordered to pay $20,000 and co-defendant Rebecca Angus was ordered to pay $2,000 – even though U.S. Bancorp was demanding significantly more.

“They specifically asked the arbitration panel for $18 million,” said Cavner’s lead attorney, Charles German of Kansas City firm Rouse Hendricks German May PC.

“They spent $3 million in legal fees to get a $347,000 judgment,” he added.

While Dade admits his side told the arbitration panel that it was seeking $18 million, he said that they weren’t expecting that entire amount from just NASD arbitration.

“The panel’s award forces Cavner and Clark to repay the equivalent of what USBI paid them during their USBI employment during the summer of 2005 while they were secretly planning to take USBI’s business to The Signature Bank,” Dade said in a news release.

He said the panel didn’t have jurisdiction over defendants The Signature Bank, Devona Breeden or Britney Murray in the allegations made by U.S. Bancorp Investments, and that it didn’t have jurisdiction over any of the defendants concerning the allegations made by U.S. Bank National Association.

“The NASD preceding only dealt with certain parties and certain issues out of an overall much larger picture,” Dade said.

The NASD award document does not mention the $18 million figure.

It does specifically deny Cavner’s counterclaims of harassment from U.S. Bancorp preceding her departure, and it does specifically deny U.S. Bancorp’s request for punitive damages.

David Kunze, The Signature Bank chairman and CEO, didn’t return phone calls seeking comment about the arbitration results. Two Signature Bank board members declined comment, and two others did not return calls.

Cavner referred all questions to her attorney.