A three-person NYSE arbitration panel in January awarded Principal Financial Securities and Everen Securities 4.45 million dollars in a case against Raymond James for raiding and breach of confidentiality agreements.
According to the award summary, Principal and Everen (which acquired Principal in December 1997) claimed that Raymond James had received confidential inf ormation when it posed as a possible buyer of Principal. Once Everen bought the firm, Raymond James allegedly used the information to raid Principal.
According to Principal and Everen, Raymond James snagged a number of Principal producers and managers in Iowa, including at least 16 Principal branch managers, two regional managers, the firm's general counsel, the chief compliance officer and 63 brokers. Everen is now part of First Union Securities.
Raymond James denied it used confidential information to recruit from Principal and that no records were taken from the firm.
The arbitrators found for the plaintiffs and directed Raymond James to pay 1.8 million dollars in compensatory damages, 2 million dollars in punitive damages, 650,000 dollar in attorneys' fees and 30,000 dollars in forum costs.
The panel also made two disciplinary referrals to NYSE enforcement. One referral involved a Principal branch manager for behavior during the raid. The panel also said the Big Board should "investigate [Raymond James' retail head] Thomas Hudson relative to alteration and/or destruction of documents" material to the case.
The award was handed down after 15 days of hearings held between March and December 1999.
Following the panel's ruling, James' attorneys filed a motion to vacate the decision while Principal's lawyers filed a motion to confirm. Rulings on both motions were pending at press time.
Attorneys from both sides refused comment, as did spokespersons from each firm. The ruling comes on the heels of another high-profile raiding case. In December, Minneapolis-based John G. Kinnard was awarded a record 16.5 million dollars by an NASD arbitration panel that concluded Dain Rauscher conducted a premeditated raid of Kinnard employees.