Raymond James Financial Services and advisor Kent Jackson Rhoades must pay Wells Fargo Advisors $20.7 million for plotting to poach advisors from a Wells Fargo office in 2018, a Finra panel ruled yesterday.

The award was the result of a claim filed by Wells Fargo in August 2020, after Rhoades and five other advisors left the Wells Fargo branch in Mountain Home, Ark., to open a Raymond James office in the same city. Their action forced the closure of the Wells Fargo office, the claim said.

Attorneys for the parties involved in the case failed to return calls by press time.

Wells Fargo alleged unfair competition, breach of contract, breach of fiduciary duty, conspiracy, tortious interference with actual and prospective business advantage and violations of Finra rules of conduct, among other charges, the ruling said.  

The Finra panel ruled Raymond James and Rhoades must pay Wells Fargo $15.3 million in compensatory damages and an interest rate of 6% on that amount until it is paid. In addition, Rhoades is personally liable for $3.5 million in attorneys’ fees and $847,000 in costs, and Raymond James was ordered to pay an additional $1 million in punitive damages.

The panel assigned arbitration fees of roughly $60,000 to Raymond James and Rhoades.

Rhoades started his career as a dually registered advisor at A.G. Edwards & Sons in 1997, according to BrokerCheck. A.G. Edwards merged with Wells Fargo in January 2008, and Rhoades remained there until Oct. 5, 2018, when he jumped to Raymond James.

Working with him in the Wells Fargo office were Steven Bettenhausen, David Matty, Janet Schmeski, Michael Stockton, and Logan Stone, all of whom accompanied Rhoades to Raymond James.

Although the five advisors were named in the original complaint, Wells Fargo withdrew its allegations against them in August 2022, but not before they filed a counterclaim accusing Wells Fargo of assigning their former clients to replacement financial advisors who “through untruths and/or deception, improperly caused clients to sever their relationships,” the award filing said.

When Wells Fargo withdrew its allegations, the five dropped their counterclaim, the award filing said.