A Financial Industry Regulatory Authority arbitration panel has ordered Stifel Nicolaus to pay $7 million in attorney’s fees to four advisors whom it accused of raiding an Indiana office when they formed a new firm, Sapient Capital, in 2023.
Stifel accused six advisors of several violations, including unfair competition and raiding; tortious interference with business relations; breach of fiduciary duty and duty of loyalty; unjust enrichment; misappropriation of confidential information; and breach of the Protocol for Broker Recruiting.
The FINRA arbitration panel last week denied Stifel’s entire claim against advisors James McLaughlin Knall, Thomas James Pence, Jeffrey Scott Cohen and Ronald Andrew LeBlanc; two other advisors previously settled their differences with Stifel. It also denied the advisors’ counterclaims but ordered Stifel to pay Knall, Pence, Cohen and LeBlanc’s attorneys fees.
The action stemmed from Stifel’s allegation that the advisors “spent months planning and orchestrating a raid on one of (its) branch offices with the intent to move all of (its) client accounts serviced by that office to their newly formed” RIA, Sapient Capital, the March 14 award noted.
Stifel, which had sought $44 million in damages at an arbitration hearing, alleged that the advisors further attempted to prevent it from servicing or retaining those clients “by illegally soliciting and attempting to hire each and every employee of (Stifel’s) branch office, and that through their raid, the advisors “have effectively transferred the value of (Stifel’s) equity and goodwill to Sapient without any compensation” to Stifel, it says.
The advisors, who sought over $61 million in damages and fees, filed a counterclaim against Stifel, alleging, among other claims, that the firm put its own financial interests above clients’ interests, creating delays and obstacles for some clients to transition accounts to Sapient.
They also alleged that Stifel had harmed their reputation in the industry, resulting in substantial financial loss.
A Stifel spokesperson didn’t immediately respond to an email seeking comment Tuesday.
The order came days after a FINRA panel ordered the firm to pay about $132 million in connection with claims arising from investment recommendations.
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