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.
Wells Fargo alleged that Raymond James Financial Services Inc. and six financial advisors conducted a “coordinated raid” of the Wells office in Mountain Home, Arkansas. In the statement of claim, Wells said the branch was forced to close.
A unanimous panel of three Financial Industry Regulatory Authority Inc. arbitrators held Raymond James and Kent Jackson Rhoades jointly liable and ordered them to pay $15,300,000 in compensatory damages, according to a Feb. 2 award. Rhoades also must pay Wells $3,500,000 in attorneys’ fees and $847,000 in costs.
Rhoades left Wells Fargo’s Mountain Home office in October 2018 to establish Financial Services & Investment Strategies Group in the same town. Rhoades’ new firm is part of Raymond James’ independent channel.
Wells Fargo accused Raymond James, Rhoades and five other advisors — Steven Bettenhausen, David Matty, Janet Schmeski, Michael Stockton and Logan Stone — of unfair competition, breach of contract and illegal interference in its business, among other causes of action.
Rhoades and the other advisors denied the allegations, according to the award document. In a counterclaim, Rhoades, Bettenhausen, Matty, Schmeski and Stone alleged that after they left Wells Fargo, the firm assigned their clients to replacement advisors who then convinced their former clients to sever their relationships with them “through untruths and/or deception.”
Grappling over who “owns” clients when advisors move from firm to firm makes up some of the fiercest arbitration and court battles in the financial industry. Wells Fargo and Raymond James squared off under similar circumstances in 2010.
Wells Fargo was happy to win again this time.
“Wells Fargo Advisors is pleased with the outcome and appreciates the arbitration panel’s recognition of the damages caused by this conduct,” Wells Fargo spokesperson Jackie Knolhoff said in a statement.
Raymond James declined to comment. Rhoades did not immediately respond to a request for comment.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
