Wachovia Securities LLC of St. Louis continues to file lawsuits against groups of legacy A.G. Edwards brokers who have left the firm.
In several cases, the firm claims in court filings that the representatives are subject to non-solicitation agreements contained in the contracts they signed in accepting retention bonuses offered by Wachovia.
But the non-solicitation clauses in those contracts only apply if reps don't pay back the money, the reps contend.
Brokers in the cases say they have paid Wachovia, or stand ready to pay back the firm as soon as they get a bill.
Late last month, Wachovia fired four legacy brokers from A.G. Edwards & Sons Inc. of St. Louis in its Florence, S.C., branch. The brokers, Frank Brand, Stephen Jones, Sonny Slaughter and George Stukes, opened a new office for
Stifel Nicolaus & Co. Inc. of St. Louis.
Wachovia sued them in federal court in an attempt to keep the reps from taking client information and contacting customers.
The firm said the brokers produced $2.9 million and had an asset base of $471 million.
The brokers said that their non-solicitation agreements weren't in force.
"Within hours of the termination" the brokers asked Wachovia for an accounting of what they owed and advised the firm that they would "immediately pay the outstanding balance," the reps said in a court filing.
In affidavits, Mr. Jones and Mr. Slaughter said that Scott Spang, Wachovia's complex manager based in Columbia, S.C, arrived in their office on June 26 with two other men they didn't know, one of whom "appeared to be there solely for his imposing physical presence."
Mr. Spang asked them if they planned to leave. When the brokers said they were, they were immediately fired and escorted out of the office, they claimed.
Rene Josey, an attorney at Turner Padget Graham and Laney PA of Florence, S.C., who represents the Florence brokers, didn't return calls.
Wachovia spokeswoman Teresa Dougherty declined to comment.
This month, the court said the reps could solicit clients but not use documents or information taken from Wachovia.
The case is awaiting an arbitration hearing.
MORE CASES ERUPT
Separately last month, Wachovia sued seven former Edwards brokers in New Hampshire who left for RBC Wealth Management.
According to Wachovia's lawsuit, broker Richard Iannacone, a 26-year Edwards veteran, together with rep Gregory Hood and four support staff members in the firm's Nashua, N.H., branch, resigned on June 19 to join Minneapolis-based RBC.
That same day, RBC opened a new branch in the same office complex as the Edwards branch.
Wachovia claimed Mr. Iannacone was a co-manager of the new office, but Mr. Iannacone said in an affidavit that he had no management responsibility.
On June 23, four more Edwards reps joined RBC in Nashua — Jeremy Hall, Thomas Lynch, Mr. Lynch's son Sean, and Paul La Greca — together with two more support staffers.
The Nashua reps produced about $5 million in annual gross revenue — about half the office's production, Wachovia claimed.
Wachovia also claimed Mr. Iannacone "actively solicited" the four additional reps while they were still at Wachovia.
Earlier, in May, broker James MacDonald of Edwards' Manchester, N.H., branch joined RBC together with two support staffers.
Wachovia claims all the New Hampshire brokers were recruited by Bill Branson, Edwards' former regional manager, who joined RBC last October. Wachovia sued the brokers in New Hampshire federal court to prevent them from taking clients, pending a full arbitration hearing.
On July 11, the lawsuit was stayed. The case is in the process of being settled, said attorney Eric Brandfonbrener of Perkins Coie LLP in Chicago, who represents the brokers.
He declined to comment further about the case.
As in the South Carolina case, Wachovia claimed that the retention bonus agreements that the New Hampshire brokers signed prevented them from contacting clients.
But the reps countered that they were free to contact customers once they paid back the bonuses, which all of them claimed they did.
Also this month, Wachovia sued former Edwards rep and branch manager Dale Englehardt of Rochester, N.Y., who left late last month for
Raymond James & Associates Inc. of St. Petersburg, Fla.
Following Mr. Englehardt to
Raymond James were three other brokers and two assistants.
The other brokers, Philip Colby, Larry Huh and David Merzel, ac-counted for $800,000 in production on $100 million of assets, the claim said. Mr. Englehardt's production wasn't provided.
The other brokers weren't named in the case.
A temporary restraining order against Mr. Englehardt has since been dissolved. The case is pending an arbitration hearing.
John Stoviak, a partner at Saul Ewing LLP in Philadelphia, who represents Mr. Englehardt and
Raymond James, wasn't available for comment by press time.
Last year, Wachovia sued 10 former California Edwards employees who left for Stifel, two former Edwards brokers in Texas and a group of four producers in Florida.
All those actions have been dismissed, settled or stayed pending arbitration hearings.
E-mail Dan Jamieson at [email protected].
