Robert W. Baird & Co. Inc. last week won a $4.6 million arbitration claim against Raymond James Associates Inc., alleging 10 counts of violating industry rules and standards that added up to a raid on one of Baird’s branch offices two years ago in Virginia.
For more than a decade, Raymond James, through its various business channels, has been one of the most aggressive and successful firms to hire and recruit financial advisors from competitors, and now has more than 8,000 financial advisors across its business. Baird has close to 1,400 advisors under its roof.
Just last year, Finra arbitrators ordered Raymond James and a financial advisor affiliated with the firm to pay nearly $20 million to Wells Fargo Advisors for depleting an Arkansas branch office of its reps.
But raiding cases are still unusual because most firms work diligently to cover any trace of a pattern or intent to harm a competitors’ wealth management business, industry lawyers and executives said.
“The size of this award, more than $4 million, very well may wake up the firm hiring the advisors that claims of raiding are alive and well,” said Louis Tambaro, an industry lawyer. “A claim of raiding means that there was a pattern, with the first party going after the second party with the intent to harm their business.”
Another industry executive, who spoke confidentially about the claim to InvestmentNews, said that proving the role of a branch manager in an effort to target the competition is also fundamental to raiding claims.
The office at the center of Baird’s raiding claim is the Wise Investor Group, which saw several financial advisors move to Raymond James & Associates, the employee broker division of the company, in September 2022. They were led by Greg Smith and Simon Hamilton and working at the time with close to $2.8 billion in client assets.
Baird’s complaint against Raymond James related to the “allegation of an illegal campaign by Raymond James and [Wise Investor Group] to wrongfully and illegally ‘raid’ Baird’s Reston, Virginia branch office of its business, employees, and value, leaving claimant Baird without an ability to fairly compete for the clients it had been serving,” according to the award published on Friday by Finra Dispute Resolution Services, which oversees industry disputes among firms, advisors, and customers.
The three Finra arbitrators were unanimous in their decision. Spokespeople for both Baird and Raymond James did not respond to requests for comment.
According to the arbitration award, Raymond James is to pay $2.8 million in compensatory damages for violating Finra’s fair practice rules, close to $1.4 million in compensatory damages for one count of tortious interference, and $350,000 in punitive damages to Baird.
Smith, Hamilton, and another former Baird advisor were ordered to pay their old firm $688,000 in compensatory damages for breach of contract, while Baird was also ordered to pay those three same advisors $500,000 in compensatory damages.
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