(Bloomberg) -- Five Credit Suisse Group AG bankers who reneged on agreements to join Jefferies Group LLC this month could face demands that they pay more than $10 million to their scorned suitor, according to a person with knowledge of the matter.
The bankers signed contracts with Jefferies that left some of them on the hook for payments of at least $1 million -- and others much more -- for backing out of the agreements, said the person, asking not to be identified because the discussions are private. Representatives for Credit Suisse and Jefferies declined to comment on the payments, while none of the bankers responded to requests for comment.
“This is an unusual and aggressive structure,” said Mark Lerner, a lawyer at Kasowitz Benson Torres & Friedman, who frequently represents banks and employees in recruitment disputes. He said he doesn’t have direct knowledge of this case.
“It’s not like a business transaction,” he said. “In hiring of individual employees it’s not very common.”
The potential claim threatens to open up a fresh round of legal battles between the two firms, which are already locked in a talent war in some of the most lucrative areas of finance. Zurich-based Credit Suisse took legal action against a group of bankers hired by Jefferies in May. The hirings also sparked a Financial Industry Regulatory Authority case against Jefferies, according to court filings and people with knowledge of the matter.
The latest issue emerged after the Swiss bank thwarted Jefferies’ efforts to lure away a group of eight bankers by retaining the five, including Jonathan Moneypenny, who was promoted to lead the U.S. loan capital markets team at Credit Suisse.
Besides Moneypenny, the Credit Suisse bankers facing the payment include Jeb Slowik, New York-based co-head of leveraged finance origination and restructuring. Dean Decker, who works in the investment-banking unit as head of gaming globally, and two members of his team, Michael Kamras and Teddy Swigert, are the others, according to people with knowledge of the matter.
Credit Suisse is likely to defend any claim from Jefferies over the payments even though the money is owed by the bankers personally, according to Laurence Moy, co-head of the financial services industry practice at law firm Outten & Golden, which represents employees in recruitment cases.
“Typically, the bank on the other side of these agreements -- in this case Credit Suisse -- would indemnify individuals with respect to defending against these claims,” he said.
Whether and how much damage Jefferies suffered from the bankers’ decision to stay at Credit Suisse would be among the main questions to resolve in any legal dispute, Moy said.
Nicole Sharp, a spokeswoman for Credit Suisse, said the bank remains “committed to investing in its market-leading businesses now and going forward.”
The three Credit Suisse employees who made the shift to Jefferies are Joseph Kieffer, who will head the U.S. part of the leveraged finance capital-markets division, John Bown, who will lead loan sales, and Brad Capadona, a loan trader, the people with knowledge of the matter said.
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