New York Securities Lawyer Blog
On April 18, 2013, a Financial Industry Regulatory Authority, Inc. (“FINRA”) arbitration panel issued an award which denied all claims raised by the broker-dealer, Wells Fargo Advisors, LLC (“Wells Fargo”), against Stifel, Nicolaus & Co., Inc. (“Stifel”), a competitor broker-dealer, and Gary P. Endres, a registered representative and former branch manager, regarding Stifel’s alleged raiding of Wells Fargo brokers in the Carlsbad and Escondido, California branch offices. See Award, FINRA Dispute Resolution No. 09-04869. Wells Fargo filed its Statement of Claim on August 19, 2009 against Wells Fargo and its broker, Mr. Endres, who left Wells Fargo to join Stifel in April 2009, along with seven other former registered representatives. Wells Fargo raised the following causes of action in its statement of claim: raiding and unfair competition; tortious interference; conversion and misappropriation of trade secrets; breach of duty of loyalty and breach of fiduciary duty; and unlawful conspiracy. Further, Wells Fargo requested over $10 million in compensatory damages, exemplary/punitive damages, and an order enjoining and restraining Stifel and Endres from hiring or soliciting the hiring of more than 40 of the financial advisors from any Wells Fargo branch. Stifel and Endres filed an Answer denying the allegations contained in the Statement of Claim, and asserting various affirmative defenses. Further, Stifel counterclaimed and requested a declaration that Stifel is permitted to recruit and/or hire Wells Fargo employees so long as it conducts itself in accordance with the Protocol for Broker Recruiting (“Protocol”) and industry standards. The Protocol permits brokers and registered representatives who move from one signatory firm to another signatory firm to solicit their clients if certain conditions are met. The primary goal of the Protocol is to further the clients’ interest of privacy and freedom of choice in connection with the movement of brokers between investment firms. After 28 hearing sessions, the FINRA arbitration panel denied all of Wells Fargo’s claims. Moreover, the panel ordered Wells Fargo to pay Stifel $800,000 in attorneys’ fees and costs pursuant to the mutual request exception to the American rule.
Lax & Neville LLP has nationally represented both firms, individual registered representatives and branch office manager in raiding cases and routinely represents individuals, securities industry employees, financial services professionals and securities industry companies in employment matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.