Raymond James Financial Services has been sued by a financial advisor duo who claimed they were induced by the firm to move their business to its independent affiliate, Concurrent Investment Advisors, even though the relationship between the two firms was “deteriorating.”
The former Merrill Lynch advisors, Liatriz Levy and David Baland of Bernalillo, N.M., alleged that they “have suffered enormous business losses and disruptions to their practice due to Raymond James’s concealment of its deteriorating relationship with Concurrent.” The suit, which was filed last month in the Second Judicial District Court of New Mexico, was moved last week to federal court.
The legal tussle between the two parties started before the filing of the lawsuit, however.
In May, Raymond James filed complaints with the Financial Industry Regulatory Authority dispute resolution unit, asserting breach of contracts and seeking to have Levy and Baland pay back loan balances of $265,313 and $397,970, respectively, as well as attorney fees and interest.
But the pair argues that Raymond James fraudulently induced them to join the firm and that all payment obligations must be voided. They are also seeking compensatory damages for disruption and lost revenue from clients who did not follow them, and punitive damages and legal fees.
“In short, Raymond James’s unlawful conduct has so thoroughly infected the relationship between the parties that it would be unconscionable to require repayment of Plaintiffs’ [loans]. Instead, the [loan] balances should be rescinded, and Plaintiffs should be made whole for the substantial damages they have suffered as a direct result of Raymond James’s misconduct,” the complaint said.
According to the suit, in October 2021 Levy and Baland met with Raymond James and Concurrent officials in Albuquerque, N.M., to discuss a joint venture. “Raymond James held itself out to be working in conjunction with Concurrent in an effort to obtain the book of business managed by Ms. Levy and Mr. Baland,” the lawsuit says.
Raymond James continued to pursue the pair, who together have more than 58 years of experience in the industry and have worked together at Merrill Lynch for 12 years, according to the lawsuit, which added that there was never any discussion or suggestion from Raymond James that the relationship with Concurrent had become problematic.
“If Mr. Levy and Mr. Baland would have been advised of the pending dispute between Raymond James and Concurrent, then they would not have taken the risk to leave Merrill Lynch,” the lawsuit said.
Levy and Baland received and accepted offer letters from Raymond James on April 8, 2022, after which they were given a transition assistance loan (TAL). Levy received a TAL of $310,000 and Baland received $465,000, according to the lawsuit.
Five months after the pair joined Raymond James, they were informed in a mass email from the firm that “Raymond James and Concurrent would no longer be working together,” according to the lawsuit. The pair were still in the process of being moved from Merrill Lynch to Raymond James at the time of the notice, the complaint said.
The pair was then given the choice of staying with either Raymond James or Concurrent. They finally decided to stay with Concurrent because staying with Raymond James would have resulted in "substantial" costs, including the repayment of the TAL loans, according to the lawsuit.
"Ms. Levy and Mr. Baland were left with only one realistic option, to leave Raymond James and remain affiliated with Concurrent,” the lawsuit said.
Staying with Concurrent meant Levy and Baland “had to move their entire business twice in a period of one year with continued transitions still in process from the initial move for specific types of investments,” the lawsuit stated.
As a result, they have lost many clients and many who have stayed have a negative perception of the move from Merrill Lynch to Raymond James to Concurrent, the lawsuit said. “One client with a $500,000 account explained he no longer felt comfortable working with Ms. Levy and Mr. Baland ... due to their abrupt departure from Raymond James. Another compared Ms. Levy and Mr. Baland to Bernie Madoff and accused them of pursuing personal profit at the expense of client relationships,” the complaint said.
The pair also claimed that they have lost roughly $500,000 to $600,000 in deferred compensation and restricted stock from Merrill Lynch, where they managed about $300 million.
Raymond James did not respond to a request for comment.
The advisor’s attorney, Kevin D. Galbraith of The Galbraith Law Firm in New York, did not respond to a telephone call to his office.
Securities attorney Robert Wayne Pearce at The Law Offices of Robert Wayne Pearce, P.A., in Boca Raton, Fla., who is not involved with the case, said Levy and Baland have a “viable claim” if there is some document evidence of an ongoing dispute between Raymond James and Concurrent at the time of recruitment.
“If indeed there was a dispute that was likely to lead to the termination of the relationship, that dispute was a material fact that both Raymond James and/or Concurrent should have disclosed to the advisors they were recruiting,” he said in an email to Financial Advisor.