Janney Montgomery Scott Wins $2.4 Million Raiding Case

November 21, 2012

A picture taken on February 8, 2011 in Rennes,...

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2011, Claimant Janney Montgomery Scott alleged that respondents Hunter Associates and McCulloch had  raided Janney's Salem, OH branch office by taking the entire branch management team, all financial advisors, and all other key personnel to open and staff a new branch office built  by Hunter Associates. The purportedly deliberate and malicious raid and other acts of unfair competition by the respondents imposed severe financial and reputational harm upon Claimant for which it sought $3,000,000 in compensatory damages plus unspecified punitive damages, costs, and fees. Claimant also sought the return of various records and documents. In its claim, Claimant asserted civil conspiracy against both respondents and additional causes of action against:

Respondent Hunter Associates:

  • raiding/unfair competition
  • tortious inducement of breaches of fiduciary duty
  • tortious interference with actual and prospective business relationships

Respondent McCulloch:

  • breach of fiduciary duty

Respondents generally denied the allegations; asserted various affirmative defenses; and filed aCounterclaim asserting:

  • breach of contract for unpaid compensation;
  • defamation;
  • unfair competition; and
  • breach of contract violations of the Protocol for Broker Recruiting.

The Counterclaim raised allegations that Claimant had

  • failed to pay Respondent McCulloch his deferred compensation;
  • published false and defamatory statements to clients; and
  • failed to fulfill its obligations under the Protocol by prosecuting this action.

The FINRA Arbitration Panel found Respondents jointly and severally liable and ordered them to pay to Claimant $2,400,000.00 in compensatory damages plus 6% per annum post -judgment interest. The Counterclaim was dismissed with prejudice. In the Matter of the FINRA Arbitration Between Janney Montgomery Scott LLC, Claimant/Counter-Respondent, vs. Hunter Associates, Inc. and Robert S. McCulloch III,Respondents/Counter-Claimants (FINRA Arbitration 11-02078, November 9, 2012).

Bill Singer's Comment

Wall Streets landscape has always been filled with contentious disputes between and among the likes of Merrill Lynch, JP Morgan, UBSMorgan Stanley,  Wells Fargo, and so many other names no longer with us, merged into the ranks of competitors, or still hanging in there. Firms come and go but among the constants are the impetus to cannibalize business; to engage in hardball tactics to jam up those who get in your way; and to pull out all the stops, legal or otherwise, compliant or otherwise, ethical or otherwise.

It's a tough Street. Always has been. Always will be. Not the pavement for the faint of heart.

READ "Street Sweeper" columns on raiding, unfair competition, and the Protocol:

Also, READ Wall Street Recruiter CraigEnderlin's 2013 Job Forecast