by Bill Singer
Ahoy mateys. Arrrrrrh. Let's raid that brokerage office.
Depending on which side is telling the story, Claimant Wachovia Securities had this office in lovely Tulsa, OK. At some point in time, it appears that the Tulsa office had about half the number of financial advisors and half the customer business that it had previously enjoyed.
Oh boy, going from X to one-half X isn’t a happy development. Not in terms of FAs. Not in terms of revenue.
Bill Singer
If you ask Wachovia what caused this diminution in bodies and dollars, they would point a wagging, angry finger at Respondent Stifel Nicholas & Company and tell you about how their office had been “raided.” You might also hear accusations about 100 confidential customer files that Stifel’s newly hired employees took.
In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in Aprill 2009, Claimant Wachovia Securities asserted causes of action for unfair competition; tortious interference; conversion; and misappropriation of confidential information. Eventually, Claimant sought:
- $5.3 million in compensatory damages plus interest;
- $1,656,561.50 in attorneys’ fees;
- $74,124.16 in costs;
- $158,240.00 in witness fees; and
- Unspecified punitive damages.
Also, Claimant sought a permanent injunction against future Stifel raids of Wachovia. In the Matter of the Arbitration Between Wachovia Securities, LLC, Claimant, v. Stifel Nicholas & Company, Inc., Gary King, and Sally Murray,Respondents (FINRA Arbitration 09-02191, March 29, 2012).
Respondents Stifel Nicholas, Gary King, and Sally Murray generally denied the allegations and asserted affirmative defenses.
Preliminaries
In April 2009, a court denied Claimant Wachovia’s request for a temporary injunction.
In July 2010, Claimant Wachovia dismissed without prejudice all claims asserted against Respondents King and Murray.
At the start of the arbitration hearing. Claimant withdrew its request for permanent injunctive relief.
DECISION
The FINRA Arbitration Panel found Respondent Stifel Nicholas liable and ordered it to pay to Claimant Wachovia $70,000 in compensatory damages.
Bill Singer’s Comment
Alas, not with a bang but with a whimper. Following some three years of litigation, Claimant Wachovia walks away with a lousy $70,000 — not even close to the millions in original demands.
What the hell went on here? Seriously — is it asking that much for just a modicum of facts so as to make this intelligible? It’s hard to justify the awarding of $70,000 without concluding that Wachovia likely proved that it had been victimized by Stifel Nicholas. Was the award compensation for a raid? Was the award compensation for:
- unfair competition;
- tortious interference;
- conversion; and/or
- misappropriation of confidential information?
I dunno and sure as hell can’t figure it out from this sparsely worded Decision.
While FINRA Arbitration Decisions have no precedential value and each stands only on the facts for the case at issue, that’s no excuse for the issuance of awards that don’t make sense. Supposing Merrill Lynch, Morgan Stanley, JP Morgan, or some other industry powerhouse has its eyes on a competitor’s branch or vice versa — any rough guidelines here as to what arbitration panels may like and not like? Not as far as I can tell.