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.
Medicare scam, pandemic benefit theft, offshore tax evasion — federal prosecutors are casting a wide net.
Report finds that pension income acts as a financial lifeline for retirees facing late-life shocks and raises urgent questions about the DC-only future.
Nine-month electronic trading freeze and share lending program at the center of dismissed claim.
Meanwhile, Rossby Financial's leadership buildout rolls on with a new COO appointment as Balefire Wealth welcomes a distinguished retirement specialist to its national network.
With a smaller group of companies driving stock market performance, advisors must work more intentionally to manage concentration risks within client portfolios.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
