(January 26) – “Jay Johnston was a rising star in Lehman Brothers Inc.’s emerging-markets department when he was recruited in early 1998 by Deutsche Bank Securities in New York,” writes Michael Schroeder in today’s Wall Street Journal.

“For both him and the unit of Deutsche Bank AG, which is trying to make its mark on Wall Street, it could have been the start of a profitable relationship.”

“Instead, in quick time even by Street standards, it became one of Wall Street’s bitter, costly divorces.”

“In a little more than a year at the Wall Street firm, Mr. Johnston’s career and multimillion-dollar contract unraveled. He was fired amid allegations that he may have violated securities-trading rules, a charge that he denies. But he fought back in an accusation-filled arbitration case. And four weeks ago, he won a $3 million arbitration award against his former employer, which is a sister entity of the better-known investment banking name, Deutsche Banc Alex. Brown.”

“Although the National Association of Securities Dealers, a self-regulator for Wall Street that heard the arbitration case, says it doesn’t keep statistics on arbitration awards in disputes between brokerage firms and their employees, the NASD arbitration award is considered to be one of the larger ones won by a Wall Street executive against a former employer.”

“While the arbitration panel awarded Mr. Johnston nearly all the compensation he requested, it did decline to give him the $66 million he sought for defamation and punitive damages.”

“The attorney for the 40-year-old Mr. Johnston, who had been head of sales in the department, argued during an eight-day proceeding before the NASD arbitration panel that the firm smeared Mr. Johnston to create a phony reason to fire him in late July 1999. ‘Mr. Johnston was on a straight line up, and 14 months later they attempted to ruin his career,’ according to the attorney, Sean O’Shea, in an interview.”

“A bank spokeswoman said, ‘Deutsche Bank vigorously denies the claims by Mr. Johnston and his attorney.’ She added: ‘Deutsche Bank believed then and believes now that it appropriately terminated Mr. Johnston’s employment. The panel granted partial relief to Mr. Johnston under an interpretation of a termination provision in his compensation contract.’ “