Stifel and Wachovia still going at it

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Dec 24, 2009 9:47 am

WFC had a MF surveillance video watching its FA’s?   nice

Stifel and Wachovia still going at it

Wachovia/Wells vows to appeal recent decision on raiding case

By Dan Jamieson

December 23, 2009, 4:49 PM EST Post a Comment Recommend       

The bad blood between St. Louis crosstown rivals Stifel Nicolaus & Co. Inc. and the former Wachovia Securities continues.

Wachovia (now Wells Fargo Advisors LLC) is vowing to appeal a raiding case it lost Dec. 18 against Stifel. The case involves four legacy A.G. Edwards brokers in South Carolina who joined Stifel in June 2008.

A Financial Industry Regulatory Authority Inc. arbitration panel ordered Wachovia to pay Stifel and the brokers $1.1 million in legal costs.

And in an unusual action, the panel also chided Wachovia for misleading a federal court about surveillance video the firm claimed to have of the brokers, which was used in getting a restraining order against them.

The case is one of several disputes that erupted between Stifel and Wachovia after Wachovia Securities LLC (then of Richmond, Va.) bought A.G. Edwards & Sons Inc. in 2007 and relocated to St. Louis.

Stifel has hired a number of disaffected former A.G. Edwards brokers.

“We’re obviously pleased,” said Joe Dougherty, an attorney at Buchanan Ingersoll & Rooney PC, who represented Stifel and the brokers in the South Carolina case.

The 33 days of arbitration hearings that spanned more than a year show “how hard fought this case was,” Mr. Dougherty added.

“Wells Fargo Advisors is very disappointed by this decision,” Tony Mattera, a spokesman for the firm, said in a statement. "We believe the case was wrongly decided and we intend to move to vacate the award"

The ill will between Stifel and Wachovia surfaced a month after the Wachovia-Edwards deal was announced in May 2007.

After Stifel chief executive Ron Kruszewski sent a letter inviting every A.G. Edwards broker to join his firm, A.G. Edwards complained.

Mr. Kruszewski blasted back at Robert Bagby, then Edwards’ chief executive, mocking him for taking a raise and millions more in guaranteed bonuses for himself, while A.G. Edwards employees were left up in the air.

The brokers in the arbitration case, Frank “Buddy” Brand, Marvin “Sonny” Slaughter, Stephen Jones and George Stukes, were all former A.G. Edwards brokers in Florence, S.C.

After they left, Wachovia Securities sought a temporary restraining order from the U.S. District Court for the District of South Carolina, claiming the men illegally conspired to take clients and staff while still working at Wachovia, and took confidential client documents belonging to the firm.

The brokers were the largest producers in the office, generating approximately $2.9 million in production on $471 million in assets, according to Wachovia’s suit.

But the South Carolina brokers, like other legacy A.G. Edwards reps who found themselves subject to similar lawsuits, say Edwards and Wachovia had ensured them that they were free to leave and contact clients. The brokers were not covered under a non-solicitation agreement.

In July 2008, federal court Judge Terry Wooten denied Wachovia’s request to prevent the brokers from soliciting clients, but ordered the men not to use or keep any documents taken from Wachovia, including basic customer contact information.

The order stayed in effect pending the Finra arbitration hearing.

In obtaining the court order, Wachovia claimed to have video of several of the brokers removing documents from the Wachovia branch and taking them to a new Stifel office in Florence.

“We have them on tape taking the things beyond what they [claimed],” Wachovia attorney Kathryn Bedke, of Paduano & Weintraub LLP, said in a June 2008 federal court hearing.

The judge didn’t see the video at the hearing, but when he asked Ms. Bedke if she wanted to admit for the record that her representations of the video were accurate, she did so.

Last month’s arbitration award ordered the parties to advise the court that the videotape “does not support the allegations” made by the firm.

The arbitrators awarded the $1.1 million in legal costs under South Carolina’s Frivolous Civil Proceedings Act.

“For some reason Wachovia took it upon themselves to hire a private investigator to have us surveilled,” Mr. Slaughter said.

But the video only “showed me putting some boxes in my car [and Mr. Jones] carrying in some bottled water and a phone book” to the new Stifel office, he said.

The three-person arbitration panel also dismissed the restraining order and ordered Wachovia to pay the full $73,000 in hearing fees.

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Dec 24, 2009 10:17 am

Does any one know if these guys repaid their retention?

Dec 24, 2009 4:08 pm

For some reason Wachovia took it upon themselves to hire a private investigator to have us surveilled," Mr. Slaughter said.


(is surveilled a word?)