The Puerto Rico Court of Appeals recently upheld a ruling in a complex financial dispute involving Oriental Financial Services, LLC (OFS) and several other parties, including Sean Warren Miles Barbosa and Stonecrest Capital Markets, Inc. The court's decision, issued on August 18, 2026, confirmed the lower court's dismissal of certain claims against Stonecrest and clarified jurisdictional issues related to arbitration under the Financial Industry Regulatory Authority (FINRA).

This ruling is significant as it addresses the jurisdictional boundaries of financial disputes and the enforceability of arbitration agreements. The outcome affects not only the parties involved but also sets a precedent for similar cases in the financial sector in Puerto Rico.

Background

The case originated when OFS and Oriental Bank filed a lawsuit against Barbosa, Gisela Contreras Gómez, Stonecrest, and others on July 13, 2021. The plaintiffs accused Barbosa, a former president of OFS, of violating a confidentiality agreement by sharing sensitive information with Stonecrest, a direct competitor. They claimed this breach led to the loss of clients and sought remedies including damages and a permanent injunction.

Barbosa and the other defendants responded by arguing that the court lacked jurisdiction over the matter because the dispute was subject to mandatory arbitration through FINRA. They filed motions to dismiss the case, asserting that the claims should be resolved through arbitration rather than litigation.

The Ruling

The Court of Appeals, led by Judge Díaz Rivera, reviewed the lower court's decisions and upheld them. The court confirmed that the lower court had correctly dismissed the claims against Stonecrest due to a lack of jurisdiction, as both OFS and Stonecrest were members of FINRA, which governs such disputes. The court noted, “the lower court determined that the claims against Stonecrest fell under the jurisdiction of FINRA and were therefore not subject to litigation.”

However, the court also ruled that the claims against Barbosa and Contreras Gómez could proceed in court. The court stated, “the allegations in the complaint were sufficient to warrant a remedy, and it was inappropriate to dismiss the remaining claims at this stage.” This decision clarified the jurisdictional issues surrounding the arbitration agreement and the confidentiality clause in the employment separation agreement.

Impact

This ruling has significant implications for financial institutions and their employees in Puerto Rico. It reinforces the importance of arbitration agreements and the jurisdictional authority of FINRA in resolving disputes between its members. The court's decision also highlights the need for clear and specific allegations when claiming breaches of confidentiality or trade secrets.

Going forward, this ruling may influence how financial firms draft their employment contracts and confidentiality agreements, ensuring they comply with both state law and FINRA regulations. It also serves as a reminder that parties may waive their right to arbitration through explicit contractual agreements.

What's Next

The parties involved may seek further legal recourse, including potential appeals to higher courts. However, the court's ruling appears to firmly establish the jurisdictional framework for this case, making further appeals challenging. Details were not available in the court filing regarding any related cases pending.