A Financial Industry Regulatory Authority (FINRA) arbitration panel in North Carolina has rejected claim of raiding and unfair competition by Wachovia Securities LLC against broker Stifel Nicolaus & Co. Inc., and ordered Wachovia to pay $1.11 million in attorneys’ fees.
In the Dec. 17 decision, Wachovia charged Stifel and four of its brokers – Frank J. Brand, Marvin Slaughter, Stephen N. Jones and George W. Stukes – with various violations of South Carolina statutes, including breach of fiduciary duty as well as raiding and unfair competition. The charges derived from the brokers’ moves to Stifel from A.G. Edwards in South Carolina, in January 2008.
Wachovia bought A.G. Edwards in 2007. The securities operation has since been re-named Wells Fargo Advisors LLC. Wells Fargo & Company took over Wachovia Corporation, on December 31, 2008.
“Wells Fargo Advisors is very disappointed by this decision,” said a Wells Fargo spokesman. "We believe the case was wrongly decided and we intend to move to vacate the award."
Stifel, Nicolaus denied the allegations. Jones, Slaughter and Stukes also filed a counterclaim against Wachovia, asserting, among other things, violation of the South Carolina Wage Payment Law and unjust enrichment, relating to the respondents’ prior employment with Wachovia.
Wachovia denied the allegations made in the counterclaim and asserted various affirmative defenses of its own. The firm asked for an unspecified amount of compensatory damages, punitive damages, and attorneys’ fees.
In its award, the FINRA panel denied Wachovia’s claims, and awarded “reasonable attorneys' fees and costs” of $1.11 million to Stifel Nicolaus under South Carolina’s Frivolous Proceedings Act. The panel also ordered Wachovia to pay hearing costs of $73,000.