A former broker who alleged that a firm made false statements to lure him to work there is entitled to $500,000 in punitive damages, an arbitration panel ruled.

GoNow Securities Inc, a Los Angeles-based brokerage, and one of its former employees must pay the sum to former broker Daniel Losito, plus $160,000 in compensatory damages, according to a ruling by a Financial Industry Regulatory Authority Arbitration panel.

Punitive damages are rare, especially in cases filed by brokers against brokerages, according to Luigi Spadafora, a securities lawyer for Winget, Spadafora & Schwartzberg, LLP in New York. This is not a common occurence, he said. Panels typically award punitive damages to punish egregious behavior by the party that must pay.

The Finra panel in Boca Raton, Florida found that GoNow and its director, Felix E. Ajegbo, who used the fake name Johnny Jones in his dealings with Losito, intended to commit a fraud in the inducement, which was intentional misconduct, according to the ruling dated last Friday..

Ajegbo pleaded guilty to a federal criminal conspiracy charge in 1995 in an unrelated case, according to a disclosure he made in regulatory filings.

GoNow and Ajegbo manipulated documents in order to make Losito believe in the legitimacy of a new office location in Florida, according to the arbitration panel. The firm and Ajegbo attempted to act in violation of FINRA rules in order to establish the Florida office when they were not permitted to do so, the panel wrote. They also made false statements about the reason for Losito's termination on his Form U-5, a document that brokerages file with regulators when an employee leaves, according to the panel.

Lawyers for Losito, GoNow and Ajegbo did not return calls requesting comment. A Finra spokeswoman said the regulator does not comment on arbitration rulings.

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