Goldman Sachs To Pay Broker $1 Million

A panel of securities industry arbitrators has ordered investment banking giant Goldman Sachs (NYSE: GS) to pay one of its former brokers $1 million following an investigation into the company's compensation system.

Greg Fullmer, 49, of Los Angeles, worked for Goldman Sachs for 11 years until the company fired him in 2004, according to the claim filed with the Financial Industry Regulatory Authority (FINRA) in Los Angeles. During Mr. Fullmer's employment, Goldman Sachs restructured its compensation plan for brokers, and began withholding a portion of brokers' commissions and converting them to restricted stock accounts that would pay out over time. Doing so saved the company approximately $250 million annually.

But when Goldman Sachs fired Mr. Fullmer, the claim states, it refused to pay him that money, saying he had forfeited his pay by soliciting firm employees to work elsewhere. In the decision handed down late last night, the FINRA panel ordered the company to pay Mr. Fullmer $1 million.

"This ruling fully vindicates Mr. Fullmer and restores his hard-earned good reputation," says attorney Rogge Dunn of Clouse Dunn Khoshbin LLP in Dallas, who represents Mr. Fullmer. "Obviously, he earned these commissions, and this award recognizes that."

Mr. Dunn says the Goldman Sachs deferred compensation plan is a classic case of "golden handcuffs." He says the company's restrictions on the deferred funds and attempts to force brokers to forfeit them are designed to keep brokers from taking their business to other firms. -- Clouse Dunn Khoshbin LLP

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