A former investment banker at Centerview Partners who sued the boutique bank claiming he was entitled to an equity stake in the firm was not an equity partner, a Delaware judge ruled Tuesday.
Many other Centerview employees, apart from plaintiff David Handler, have held the title of partner, Delaware Chancery Court Judge David Glasscock III wrote Tuesday in a ruling seen by Bloomberg and the Financial Times.
“Such partners were no more equity holders than Colonel Harlan Sanders was a field officer,” Glasscock wrote, referring to the founder of Kentucky Fried Chicken restaurants.
Rather, Glasscock wrote, Handler was an “employee with certain vested rights in Centerview.”
Handler joined Centerview in 2008 and led the firm’s tech banking practice, advising such clients as Cisco Systems and Qualcomm. But he left in 2022 amid a rift with founders Blair Effron and Robert Pruzan, the Financial Times reported. Handler later founded Tidal Partners alongside David Neequaye.
In his lawsuit, Handler alleged that Pruzan and Effron in 2012 promised to give him a nearly 7% equity stake in Centerview because of his tech group’s outstanding performance, the Financial Times reported.
The stake would be worth millions of dollars, Handler said.
Though both Handler and Centerview said no formal contract was signed, Glasscock said the parties otherwise gave different accounts of the 2012 meeting, and that Handler failed to provide adequate proof that an agreement was reached.
“[T]he documentary evidence pointed to by Handler is some evidence of an oral partnership, but not strong evidence,” Glasscock wrote, according to the Financial Times. ”The record demonstrates that the changes in Handler’s compensation, post the November 8th [2012] Meeting, merely indicate Handler accomplished his purpose at the meeting, to increase his compensation at Centerview.”
Centerview argued that Handler’s own emails and records showed he did not believe his partnership agreement with Centerview was binding. Centerview cited, in court filings a 2013 message to another banker at the firm, in which Handler wrote, “I have to actually sign this thing?”
Handler’s breach-of-contract claims against the firm over back pay and equity are pending.
“Today the court said what we’ve long known to be true: Mr Handler’s partnership claims are baseless and part of his unsuccessful scheme to leave Centerview with a massive payout,” Centerview said in a statement to the Financial Times.
Handler had sought a ruling on his partnership status to compel Centerview to grant him access to its financial records. He also alleges that the firm disparaged him to clients toward the end of his tenure, to facilitate his ouster and replacement.
However, Centerview has denied these allegations, asserting that Handler was attempting to extract undeserved compensation and that any equity he may have earned was contingent on his continued employment at the time of a potential Centerview initial public offering or sale.
