Raymond James and a registered rep, Kent Jackson Rhoades, are on the hook for a virtually $20 million arbitration award from the Monetary Business Regulatory Authority (FINRA) after a “raid” on a Wells Fargo department in rural Arkansas.
Based on the arbitration award signed on Feb. 3, Wells Fargo Advisors flung quite a few claims towards Raymond James and a number of other former reps, together with unfair competitors, breach of contract and conspiracy. The award argues Raymond James poached plenty of reps in a “coordinated raid” on a Wells Fargo department workplace in Mountain Residence, Ark., which brought about the department to shut.
The person reps named embody Kent Jackson Rhoades, Janet Schmeski, Michael Stockton, Logan Stone, Steven Bettenhausen and David Matty; the primary 4 are presently registered with Raymond James in Mountain Residence, whereas the latter two have been registered there till 2020 and 2021, respectively, and are presently not registered, in response to their BrokerCheck profiles.
In 2018, Raymond James allegedly approached and recruited the prevailing Wells Fargo advisors on the Mountain Residence department, in response to a person at Wells Fargo with data of the state of affairs. The departing reps resigned en-masse and arrange a brand new Raymond James store a few mile away, taking a lot of the Wells department belongings with them.
Since these department places of work have been positioned in a reasonably distant location, Raymond James could have discovered it onerous to recruit new advisors, which might have led them to method the Wells reps, in response to the person at Wells Fargo.
However Raymond James and the reps denied the allegations. They argued that earlier than they left Wells Fargo, the agency assigned their shoppers to “substitute monetary advisors and that the substitute monetary advisors, by untruths and/or deception, improperly brought about shoppers to sever their relationships” with the reps.
“Wells Fargo Advisors is happy with the end result and appreciates the arbitration panel’s recognition of the damages brought on by this conduct,” Wells Fargo Spokeswoman Jackie Knolhoff informed WealthManagement.com (Raymond James declined to remark).
Final August, Wells Fargo withdrew its claims towards Bettenhausen, Matty, Schmeski, Stone and Stockton, although the claims towards Raymond James and Rhoades continued to face, in response to FINRA. In response, these 5 reps dismissed their counterclaims, which meant the FINRA arbitration panel “made no dedication” on the aid requested by these reps towards Wells Fargo.
In complete, Raymond James and Rhoades have been discovered to be “collectively and severally liable” for $15.3 million in compensatory damages, in addition to annual 6% curiosity till the penalty is totally paid. Moreover, Rhoades was on the hook for greater than $4 million in attorneys’ charges and different prices, and his counterclaim was denied. Raymond James additionally owes a further $1 million in “punitive damages,” in response to FINRA.