[ by Howard Haykin ]

A FINRA arbitration "raiding claim" case between Stifel Nicolaus and Wells Fargo, that began in 2009, had 24 days of hearings, and included 18 Stifel advisers as respondents, ended with the arbitration panel issuing a $1.4 million award to Stifel.  In what started out as 3 separate cases that later were combined, a unit of Wells Fargo filed a complaint accusing Stifel Nicholas & Co. of improperly recruiting a group of brokers from a New York City area branch office. 

The issue involved an industry practice known as "raiding," according to the ruling.  A raiding claim typically is made when a firm loses as much as 30% to 40% of an office's production in a single hiring spree or over a short period of time.  Wells Fargo further charged, among other things, that both the brokers and Stifel interfered with Wells Fargo's business relationships, and that the brokers breached their employment contracts. 

The objective of claimants' counsel is to convince the arbitrators that the respondent firm illegally raided its office of personnel.  The task of respondents' counsel is to convince the arbitration panel that their client(s) simply employed smart recruiting techniques.

Time Frame Involved.   The said incident(s) took place prior to Wells Fargo's acquisition of Wachovia Corp in 2008.  Also in 2008, but prior to the Wells transaction, Wachovia acquired AG Edwards Inc.  Wachovia agreed to move its brokerage business to St. Louis, MO, the home of A.G. Edwards, from Richmond, VA, as part of the deal. 

Stifel Nicholas, a unit of Stifel Financial Corp, also is based in St. Louis.  After Wachovia announced its intention to buy A.G. Edwards, a firm with over 7,000 brokers, dozens of A.G. Edwards brokers, managers and support staff defected to the cross-town rival. 

Wachovia filed a string of arbitration claims against Stifel and the individual brokers and managers.  Most have been resolved to date in Stifel's favor.  In two other cases, FINRA panels also awarded legal fees to Stifel. 

Ron Kruszewski, Chairman and CEO of Stifel Financial issued this statement, following the decision:  "This case continues to underscore that people are free to work at the place of their choosing."  The FINRA panel provided no explanation for its decision in the ruling.
 

For further details, go to:  [ Reuters, 1/14/13 ]