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A former top investment banker at Centerview Partners did not strike a valid agreement to become a full-fledged partner at the elite advisory firm during a restaurant meeting held more than a decade ago, a Delaware corporate law court ruled on Tuesday.
The decision deals a blow to efforts by the banker, David Handler, to win hundreds of millions of dollars in Centerview equity he says he is owed.
The fight between the sides had been a rare controversy at a bank considered among the most profitable Wall Street advisers in history. Handler had joined Centerview 16 years ago and made hundreds of millions of dollars in pay, advising such clients as Cisco Systems and Qualcomm.
Handler, who led the tech banking practice at Centerview beginning in 2008, left the boutique in 2022 amid a rift with Centerview’s founders, Blair Effron and Robert Pruzan.
After his departure, Handler sued the firm, claiming he had struck a deal at a November 2012 meeting at Manhattan’s University Club with the two founders that gave him a roughly 7 per cent stake in Centerview that could now be worth hundreds of millions of dollars.
Both Handler and Centerview agreed no contract had been signed. However, Handler said the firm in the years after had agreed to terms of what was described by Handler as an “oral partnership agreement”.
Centerview said Handler’s own emails and records demonstrated that he did not believe he had struck a binding partnership agreement with Centerview. In a 2013 message to another Centerview banker — which was cited in court filings — Handler wrote, “I have to actually sign this thing?”, in reference to the partnership agreements being exchanged between Centerview and Handler.
The judge, Sam Glasscock of the Delaware Court of Chancery, said the evidence presented by Handler showed some indications that the banker’s arrangement at Centerview had changed after the University Club meeting, but not enough to show he was an actual partner.
“‘[T]he documentary evidence pointed to by Handler is some evidence of an oral partnership, but not strong evidence . . . 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,” Glasscock wrote.
Handler’s breach of contract claims against Centerview over back pay and equity remain pending in the Delaware court. Handler had sought a ruling on his partnership status in an effort to force Centerview to open up its books to him.
Handler claimed the firm had badmouthed him to clients at the end of his tenure in order to ease him out and replace him. Centerview has denied that, alleging that Handler was attempting to shake them down for money he did not deserve and that, regardless, whatever equity he had earned required him to be an employee at the time of a Centerview IPO or sale.
“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.
A representative for Handler said in a statement: “The judge found that when Mr Handler left Centerview in 2022, he had vested rights in Centerview and that there is evidence in the record supporting this position”. Handler looked forward to pursuing his breach of contract claims lawsuit, the representative added.
The court filings in the case, along with the public hearings held in 2023, provided a rare glimpse into the complex workings of how pay and status are set for elite finance moneymakers. At the end of a November court session Glasscock told attendees that the dispute was a “rather bizarre case”.
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