A FINRA arbitration panel ended an 8-year feud between and Citigroup Inc. over 9 top financial advisers who were "enticed" into defecting to Citigroup.  OpCo, which sought $18 million in a case filed back in 2003, accused Citigroup of raiding and predatory practices and tortious interference with its business relationships, among other things, according to the ruling. 

The case involved 9 former OpCo advisors in an  L.A. office who joined Smith Barney, then Citigroup's retail brokerage unit.  The group of advisors apparently had generated 30% of that office's total revenue production.  In the Statement of Claim, OpCo accused Citigroup of illegally raiding its brokerage business in 2003, shortly after it was sold to Fahnestock Viner Holdings.  Fahnestock later became Oppenheimer Holdings Inc., following a name-change.  

Citigroup, it seems, hired away the advisers and violated its own internal recruiting standards by paying more in hiring bonuses than it had historically.  OpCo also accused one of its former advisors, who later joined Citigroup, as acting as a "mole" for Citigroup while still working at Oppenheimer.  That advisor, Jeffrey Bischoff, at the time an in-house Citigroup recruiter, allegedly was enlisted by Citigroup to lure former colleagues he had known during a stint working at Oppenheimer from 1996 to 1999.

Bischoff told Dow Jones Newswires that he was one of many recruiters who called their advisors at the time because of the change in ownership.  "It was simply business. These people were going to leave anyway."

FINRA Panel Decision.   Oppenheimer, it was concluded, had failed to demonstrate that "any defined or even articulable principle or standard of trade was violated in this case," according to a 17-page decision dated 1/4/11, that included a rare explanation of reasons for the panel's ruling. 

It was well-known throughout the office that many of the advisors in the OpCo office at the time were being recruited by more than one firm, the panel wrote.  The panel, in part, wrote:  OpCo's "blatant assumption" in the case is that the firm's advisors were "somehow property or chattel belonging to it and it alone."  That assumption "ignores" advisers' rights to "change their employment for any legal reason."

In addition to rejecting OpCo's claims, the panel also required the claimant OpCo to pay the full $100,000 for forum fees in the case.    [Fincl Adviser News, 1/7]