FOR IMMEDIATE RELEASE -

A NASD arbitration panel issued an order today rejecting the claims brought by Fidelity Brokerage Services against James Pacholek, a former financial advisor for the broker/dealer.  Fidelity alleged in the dispute that Pacholek solicited the clients he served while employed by Fidelity to terminate their relationship with Fidelity in violation of restrictive non compete and non solicitation agreements in place between the two parties as part of Pacholek's employment with Fidelity. Fidelity also alleged that Pacholek retained and used trade secret information.

Pacholek's defense to the claims involved, in part, whether the Fidelity employment agreement used nationally complied with Texas law.  Additionally, Pacholek argued that basic contact information committed to memory cannot be a trade secret under Texas law.

After a two-day hearing, the NASD panel ruled unanimously in favor of Pacholek.  The panel held that the Fidelity employment agreement is not binding in Texas: "Because the Employee Agreement fails to meet one of the basic elements of a contract [under Texas law], it cannot be enforced." The Panel further agreed that basic contact information committed to memory is not a trade secret under Texas law.

Cody Towns represented Mr. Pacholek at arbitration.

The matter is Fidelity Brokerage Services, LLC v James Pacholek and Citigroup Global Markets, Inc. d/b/a Smith Barney, NASD-DR Arbitration No. 07-01717.

-update: Texas law supporting the contractual defense changed since the time of this decision. Please call our office to discuss further.