A FINRA arbitration panel has found Raymond James & Associates liable for raiding four AG Edwards branches just after it was acquired by Wachovia Securities in October 2007 and ordered Raymond James to pay $12.1 million.
As a result, parent company Raymond James Financial Inc. [RJF] has had to update its first quarter results, for the three months ending Dec. 31, to include an increase in expenses of $10.75 million, a decrease in private client group pre-tax results of $10.1 million to $32.7 million and a decrease in net income of $6 million to $42.9 million. This led to a decrease in diluted earnings per share of 4 cents per share to 35 cents per share.
In a statement, Raymond James said the panel did not provide any explanation for its decision and the firm “does not agree with the panel’s decision and believes that the financial advisors concerned were evaluating other affiliation alternatives at that time, in response to the takeover of AG Edwards by Wachovia.”
The firm said it is reviewing the matter but acknowledged it’s difficult to appeal arbitration award decisions.
Following its takeover of AG Edwards, Wachovia aggressively pursued firms it accused of raiding advisors with mixed success. A number of cases are still pending under its new parent company, Wells Fargo [WFC], which acquired Wachovia in December 2008.
A Wells Fargo spokesperson said: "We are pleased with the award. The arbitrators clearly recognized the distinction between legitimate, permissible recruiting conduct versus raiding. We are glad that the arbitrators focused on the facts and made the proper conclusions."