from the Circuit Court of Cook County. No. 10 L 8708
Honorable Thomas R. Mulroy Judge Presiding.
JUSTICE SIMON delivered the judgment of the court, with
opinion. Presiding Justice Connors and Justice Harris
concurred in the judgment and opinion
1 This appeal is before the court following a jury trial.
Plaintiff Christopher Gilmore sued his former employer and
its two principals. Plaintiff sought, among other claims, a
return of his capital contribution and wages he claims he is
owed. The jury awarded plaintiff $128,219.03, and the court
entered judgment in that amount, plus interest. Plaintiff
appeals arguing that he is entitled to more. We affirm in
part and reverse in part.
3 Plaintiff Christopher Gilmore is a securities and
commodities trader. Defendant Henning-Carey Propriety
Trading, LLC is a trading firm located in Chicago. Defendants
Joseph Niciforo and Charles Carey are the two principals of
the trading firm, and each holds a 50% stake in the company.
4 In 2009, the parties began negotiations for plaintiff to
come to the firm and work as a trader. Through their lawyers,
the parties exchanged offers and ended up with an agreement.
Their relationship is actually governed by multiple
agreements and understandings, including a "Services
Agreement for Business Development and Proprietary
Trading" and the company's "Operating
Agreement." Upon reaching an agreement, plaintiff agreed
to make a $250,000 capital contribution to become a Class B
member of the firm.
5 Henning-Carey has two types of proprietary traders. The
firm has general proprietary trading employees, who trade on
capital provided by the firm and whose losses are covered
only partially by the firm. And the firm has Class B members
whose trading is supported by the capital they contribute to
the firm and the firm covers only a portion of the losses.
Class B members receive a more favorable tax status and
receive a greater share of profits than general proprietary
6 The Services Agreement covers plaintiff's initial terms
of employment. It provides that plaintiff will work for a one
year term as a salaried employee. The agreement provides that
plaintiff will be paid $15,000 per month, not based on
performance, to manage the firm's trading operations on
GOVX. The agreement further provides that plaintiff, as an
independent contractor, will receive 80% of net profits
generated on liquidity provided by Henning-Carey in its
"Prop Trading Business" and that Henning-Carey
bears the risk of, and will absorb, the losses of that
7 Plaintiff then made the $250,000 capital contribution to
become a Class B member of the firm. As a condition of his
new role as a member, plaintiff executed the Henning-Carey
operating agreement that covers members of the LLC. Plaintiff
admits that he became bound by this agreement when he made
his capital contribution and became a Class B member of the
firm. The operating agreement provides that Class B members
are responsible for their own losses. Class B members at
Henning-Carey work on 80/20 splits. That means that when a
trader is trading under his Class B status, he receives 80%
of the trading profits and assumes 80% of the trading losses,
while Henning-Carey receives 20% of trading profits and
assumes 20% of the trading losses.
8 Plaintiff began trading in October 2009, using what was
supposed to be sophisticated trading software called Orc.
However, from the beginning, plaintiff began to suffer heavy
losses. Plaintiff blamed the losses on the software, claiming
that it was freezing and malfunctioning at key points.
Defendants Carey and Niciforo became concerned with the large
losses plaintiff was sustaining so they began to discuss
amongst each other whether plaintiff's losses were
attributable to the firm or if they would be mainly covered
by plaintiff. Henning-Carey's risk manager testified that
he met with plaintiff about the large losses and that
plaintiff stated that he had "been successful before,
that it was his money, and he knew what was going on with
it." In the month of November 2009, plaintiff had
trading losses of more than $60,000, culminating with a loss
of $28,000 on November 30th. Plaintiff lost $21,000 more on
9 The next day, the parties held a risk management meeting at
which defendants expressed concern about the magnitude of
plaintiff's losses. Joseph Niciforo testified that
plaintiff said, "don't worry, it's mostly my
money" and that plaintiff stated that he was
"losing a lot more money that you, Joe." Defendants
imposed a $10,000 a day stop-loss on plaintiff, meaning that
if he lost $10,000 in a day, he would have to stop trading
for the day. Plaintiff continued to lose money though, about
$40,000 more through the rest of December.
10 When it came time for plaintiff to be paid his $15,000
monthly salary at the end of the first pay period on January
15th, his paycheck was reduced from $7,500 to $6,250. His
subsequent two paychecks were similarly reduced.
11 Despite the $10,000 stop-loss defendants imposed, on
February 12th, plaintiff lost $39,000. Defendants decided to
terminate his employment. Defendants allocated losses and
expenses against plaintiff's account. Henning-Carey
determined that plaintiff was responsible for 80% of the
losses as a Class B trader and, when plaintiff's share of