Raymond James, Rep to Pay $20M Over Recruiting ‘Raid’ on Wells Fargo Office
Raymond James recruited away the branch office's entire team, resulting in its closure, Wells Fargo Advisors said.
A Financial Industry Regulatory Authority arbitration panel has ordered Raymond James and a former Wells Fargo advisor to pay Wells Fargo Advisors nearly $20 million, the broker-dealer regulator announced Thursday.
According to the award, Raymond James and the former advisor, Kent Jackson Rhoades, are jointly and severally liable to pay Wells Fargo Advisors $15.3 million in compensatory damages. Rhoades must also pay $3.5 million in attorneys’ fees and another $847,000 in other costs.
Raymond James is also required to pay $1 million in punitive damages.
Wells Fargo Advisors asserted that it “was damaged” by a “coordinated raid” conducted by Raymond James and Rhoades of a branch office in Mountain Home, Arkansas, “which targeted all of the employees of the Mountain Home Branch and resulted in its closure.”
Raymond James recruited Wells Fargo advisors away and opened a new branch office in the same town. The entire team left Wells Fargo and opened a new office with a Raymond James sign.
The team joined Raymond James in late 2018 with six advisors — Rhoades, Jan Schmeski, Mike Stockton, Steve Bettenhausen, David Matty and Logan Stone — six other staff members and some $560 million in assets, they announced at the time.
Wells Fargo Advisors claimed “unfair competition, breach of contract, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, conspiracy, tortious interference with actual and prospective business advantage and/or relationship, tortious interference with contractual relations” as well as violations of FINRA rules and unjust enrichment.
Wells Fargo Advisors said in a statement that it was “pleased with the outcome and appreciates the arbitration panel’s recognition of the damages caused by this conduct.”
Initial claims against Bettenhausen, Matty, Schmeski, Stockton and Stone were withdrawn Aug. 16, 2022, according to the award. Bettenhausen and Matty are no longer registered as brokers or investment advisers, according to FINRA’s BrokerCheck.