Jan 14 A unit of Wells Fargo & Co lost a
$1.4 million securities arbitration case against Stifel Nicolaus
& Co, whom it alleged improperly recruited a group of brokers
from a New York City area branch office, according to a ruling.
The decision by a Financial Industry Regulatory Authority
panel, dated Sunday, ends a long dispute that began in 2009 and
played out during 24 days of hearings, according to the ruling.
Wells Fargo Advisors also named a total of 18 Stifel advisers as
respondents in the case, which started as three separate cases
that were later combined.
A Wells Fargo spokesman declined to comment.
At issue in the case is a practice known as "raiding,"
according to the ruling. A raiding claim is typically made when
a firm loses 30 percent to 40 percent of the production - the
amount brokers generate in revenue during a year - from a branch
office in one swoop or over a short period of time, say lawyers.
Wells Fargo also alleged, among other things, that the
brokers and Stifel interfered with its business relationships
and breached their employment contracts. But experts say there
can be a fine line between smart recruiting and raiding.
The saga pre-dates Wells Fargo's acquisition of Wachovia
Corp in 2008. Wachovia, which purchased AG Edwards Inc in 2008,
agreed to move its brokerage business to St. Louis from
Richmond, Virginia, as part of the deal. Later, in the depths of
the financial crisis, Wells Fargo purchased Wachovia.
Stifel, a unit of Stifel Financial Corp, is also
based in St. Louis. Dozens of AG Edwards brokers, managers and
support staff defected to the cross-town rival after Wachovia
announced it was buying AG Edwards, a firm with more than 7,000
brokers that was founded in 1887.
Wachovia responded with a string of arbitration claims
against Stifel and individual brokers and managers. Most have
been resolved to date in Stifel's favor. FINRA panels, in two
cases, also awarded legal fees to Stifel.
"This case continues to underscore that people are free to
work at the place of their choosing," said Ron Kruszewski,
chairman and chief executive of Stifel Financial.
The FINRA panel, as is typical, did not include the reasons
for its decision in the ruling.