In their suit against Donald Fewer of Colts Neck, Gooch and his partners claim damages of $220 million as a result of a drop in the price of GFI Group shares when news of the mass exodus hit the street.
From the Press:
The lawsuit, filed in Superior Court in Monmouth County, said Fewer joined GFI as head of the credit derivatives trading desk in 1996 and was made a senior managing director in 2000, entitling him to millions worth of stock options.
But in January 2005, after GFI went public, the company named another partner, Colin Heffron, president, and Fewer became resentful, the lawsuit contends.
The lawsuit said Fewer began to plot to damage the credit derivative business by working behind the scenes with Tradition, a New York brokerage firm, which, until then, hadn’t had much success developing a credit derivative desk.
In one case, Fewer negotiated and offered a high-performing broker a job at Tradition, which included a multi-million dollar compensation package. And Fewer’s Blackberry showed he had sent hundreds of text messages to Tradition’s CEO Emil Assentato, the lawsuit said.
On April 14, Fewer resigned from GFI. And on April 18, more than 20 credit brokers failed to report to work at GFI, according to the lawsuit.
“Fewer’s departure was part of a concerted effort by one of its competitors to raid GFI’s highly successful North American credit product brokerage business by hiring members of GFI’s New York credit brokerage staff,” the company said in an April 18 news release.
GFI’s stock that day fell from $15.65 to $11.93, or 24 percent, and it hasn’t recovered. The drop cost Gooch and his partners $220 million, according to the lawsuit.
At the time of the exodus, GFI issued a press release making its displeasure known. It said, in part:
GFI believes that Mr. Fewer’s departure is part of a concerted effort by one of its competitors to raid GFI’s highly successful North American credit product brokerage business by hiring members of GFI’s New York credit brokerage staff. GFI believes that approximately two dozen of its North American credit brokers may be in the process of defecting to its competitor, notwithstanding contractually binding obligations on Mr. Fewer and others against unlawful competition and soliciting employees. GFI believes that for the fiscal year ended December 31, 2007 these brokers contributed approximately $50m of GFI’s $970m in global revenue.
GFI intends to respond aggressively to this situation while continuing to provide effective service to clients in North America for credit products. GFI will defend its contractual and legal rights against unfair competition to the full extent of the law.
There’s no mention, however, of the lawsuit on the company’s website, and the Press story does not name the firm itself as a party to the suit.
Gooch and his wife, Diane, own the Two River Times, published in Red Bank, and have been involved in a long-running property spat with their next door neighbors, Heisman Trophy winner Pete Dawkins and his wife, Judith.