Waddell & Reed Financial Inc. on Thursday announced an agreement by one of its subsidiaries, Waddell & Reed Inc., to settle an arbitration case for $7.9 million with a former financial adviser, Stephen Sawtelle. In conjunction with the settlement, the parties entered into mutual releases of all claims.

Sawtelle has had a National Association of Securities Dealers arbitration panel side with him against his former firm, winning a judgment of at least $25 million. But, courts twice rejected the judgments as too high.

Sawtelle had argued that he had been fired in retaliation for his testimony in an SEC investigation of another broker, and that Waddell & Reed had interfered with his subsequent business with a competitor.

The Overland Park-based financial services company said Thursday that it would expect to record a charge, net of taxes, of about $3.8 million in the fourth quarter.