Industry News

Wells ordered to pony up $800K in raiding case

In yet another loss in a series of raiding claims, Wells Fargo is ordered to pay Stifel Nicolaus $800K in legal fees.

Wells Fargo Advisors LLC has been ordered to pay Stifel Nicolaus & Co. Inc. $800,000 in legal fees after losing a broker-raiding claim.
The case represents another loss for Wells Fargo Advisors in a series of raiding claims it brought against former A.G. Edwards brokers and managers who left the firm after Wachovia Securities LLC bought Edwards in 2007.
Wachovia was later renamed Wells Fargo Advisors.
The California case, decided last Thursday by a three-person arbitration panel administered by the Financial Industry Regulatory Authority Inc., stems from a 2009 claim Wells Fargo Advisors filed against both Stifel and Gary Endres, a former branch manager of Edwards’ Carlsbad, Calif., branch, who joined Stifel in April 2009.
A total of seven other former Edwards representatives also left the Carlsbad office for Stifel.
Wells Fargo originally sought more than $30 million in damages in its claim.
This is the third time arbitration panels have stuck Wells Fargo for Stifel’s legal fees in similar raiding cases.
In 2009, a Finra arbitration panel ordered Wells Fargo to pay $1.1 million in legal costs to a group of former A.G. Edwards brokers in South Carolina.
And again in 2010, another panel ordered the firm to cough up $915,000 in legal fees to Stifel over a case involving a Grass Valley, Calif., office.
Wells Fargo appealed both of those decisions and lost.
Two more raiding cases are pending against Stifel in California involving Wells Fargo brokers in the towns of Paradise, a suburb of Sacramento, and Oxnard, just north of Los Angeles, according to Jon Lee, managing director in charge of West Coast recruiting for Stifel.
“At some point, you would think someone at Wells Fargo would say this is insanity, to spend millions” on legal fees, Mr. Lee added.
“It’s disappointing that people and individuals have to go through these things, after the history of previous arbitrations,” Mr. Endres said.
Wells Fargo Advisors spokeswoman Rachelle Rowe declined to comment.
Separately, Stifel announced yesterday that it has brought over an 11-person group in the Northwest from Wells Fargo Advisors Financial Network.
The group operated as RMG Asset Management LLC and was responsible for $1.38 billion in client assets, according to Stifel. It is headed by branch manager Mark McClure, who is based at the group’s main office in Bellevue, Wash., together with a two-person branch in Portland, Ore.
The group has worked together for more than a decade and together produces almost $10 million in revenue, Mr. Lee said.
“They’re really research-driven, with the majority of production from discretionary portfolio management,” he said.
The new recruits operate as the Stifel RMG Group.
Mr. Lee said the group was able to move without litigation because Wells Fargo’s FiNet is an independent-contractor unit where advisers retain ownership of client accounts.