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February 05, 2010 |
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Raymond James Ordered To Pay $12M |
(Dow Jones) A securities arbitration panel has ordered Raymond James Associates
Inc. to pay $12.1 million to Wells Fargo Advisors LLC for alleged
raiding.
The case involves 20 advisors who moved to Raymond James
from four branches of A.G. Edwards & Sons Inc. in 2007. The moves,
from two A.G. Edwards branches in Indiana and two others in Illinois
and Arkansas, occurred after Wachovia Securities LLC announced it was
purchasing A.G. Edwards in May 2007, said Anthea Penrose, a Raymond
James spokeswoman.
Wachovia Securities allegedly lost $5.3 million in
production from the departures of these advisors, according to Teresa
Dougherty, a spokeswoman for Wells Fargo Advisors.
Wachovia Securities was acquired by Wells Fargo & Co., which filed the arbitration claim, at the end of 2008. The
combined brokerage force became Wells Fargo Advisors in May 2009.
"The arbitrators clearly recognized the distinction between
legitimate, permissible recruiting conduct versus raiding," Dougherty
said.
Matthew Farley, a New York securities lawyer who represents
brokerages, says determining whether raiding occurred often depends on
circumstances such as the size of the firm, and whether a
disproportionate amount of hurt is inflicted on the business. There is
no bright-line legal test, he said.
"It is one thing to hire a rep and something else to hire a
team, but going after an entire branch office can look abusive," Farley
said.
The A.G. Edwards branches that were the subject of the claim
had $5.94 million in revenue and managed $853 million in assets,
Raymond James's Penrose said.
"Raymond James considers the award a miscarriage of justice
and not based on the facts presented at the hearing, the applicable
law, [or] standards in the industry," Penrose said in a statement.
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