Raymond James & Associates Inc. was ordered by an arbitration panel to pay
Wells Fargo Advisors LLC $12.1 million in a case involving claims of broker raiding.
The decision, issued Feb. 1, involves a 2007 raid of several A.G. Edwards & Sons Inc. branches in Indiana, Illinois and Arkansas, following the May 2007 announcement by Wachovia Securities LLC that it was buying Edwards.
Raymond James "considers the award a travesty of justice and not based on the facts presented at the hearing," said Anthea Penrose, a spokeswoman for
Raymond James, in a statement.
The panel failed to consider the "unique circumstances surrounding Wachovia’s acquisition of A.G. Edwards and the resulting desire of the A.G. Edwards’ advisers to seek employment elsewhere," she said.
The firm said it was reviewing the decision to determine its next course of action.
The brokers and branches involved had $5.94 million in annual revenue with assets of $853 million, Ms. Penrose said.
"The arbitrators clearly recognized the distinction between legitimate, permissible recruiting conduct versus raiding," said
Wells Fargo spokeswoman Theresa Dougherty in a statement.
Ms. Dougherty said three offices were involved, and that the alleged lost annual production was $5.3 million.
Ms. Penrose said a former Edwards office in Fort Smith, Ark., was also part of the complaint.
In addition to
Raymond James, A.G. Edwards also named four brokers in its November 2007 arbitration claim. It claimed the reps, Theodore Sturges, Stephen Merrick, Donald Minton and Martin Smith "diverted [Edwards'] clients, employees, and confidential and proprietary information," according to the award.
The arbitrators dismissed the claims against the individuals, but found
Raymond James liable for $10.5 million in damages, $1.5 million in attorneys' fees, and $115,000 in costs.
Mr. Sturges left Edwards in August 2007 to work at a
Raymond James office in Carmel, Ind.
Mr. Merrick and Mr. Minton, both formerly with Edwards in Evansville, Ind., joined
Raymond James in September 2007.
Mr. Smith is at a
Raymond James office in Loves Park, Ill. He left Edwards' Rockford, Ill. office in July 2007.
A.G. Edwards became part of
Wells Fargo after Wells acquired Wachovia Corp. in 2008.
Raymond James amended its fourth-quarter earnings statement to account for the award, which produced a net $10.75 million charge against earnings.
