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Raymond James and a registered rep, Kent Jackson Rhoades, are on the hook for a virtually $20 million arbitration award from the Monetary Trade Regulatory Authority (FINRA) after a “raid” on a Wells Fargo department in rural Arkansas.
In line with the arbitration award signed on Feb. 3, Wells Fargo Advisors flung quite a few claims towards Raymond James and a number of other former reps, together with unfair competitors, breach of contract and conspiracy. The award argues Raymond James poached a lot of reps in a “coordinated raid” on a Wells Fargo department workplace in Mountain House, Ark., which brought on the department to shut.
The person reps named embrace Kent Jackson Rhoades, Janet Schmeski, Michael Stockton, Logan Stone, Steven Bettenhausen and David Matty; the primary 4 are presently registered with Raymond James in Mountain House, whereas the latter two had been registered there till 2020 and 2021, respectively, and are presently not registered, in accordance with their BrokerCheck profiles.
In 2018, Raymond James allegedly approached and recruited the prevailing Wells Fargo advisors on the Mountain House department, in accordance with a person at Wells Fargo with information of the scenario. The departing reps resigned en-masse and arrange a brand new Raymond James store a few mile away, taking many of the Wells department property with them.
Since these department places of work had been situated in a reasonably distant location, Raymond James might have discovered it onerous to recruit new advisors, which might have led them to strategy the Wells reps, in accordance with the person at Wells Fargo.
However Raymond James and the reps denied the allegations. They argued that earlier than they left Wells Fargo, the agency assigned their purchasers to “substitute monetary advisors and that the substitute monetary advisors, by way of untruths and/or deception, improperly brought on purchasers to sever their relationships” with the reps.
“Wells Fargo Advisors is happy with the end result and appreciates the arbitration panel’s recognition of the damages brought on by this conduct,” Wells Fargo Spokeswoman Jackie Knolhoff instructed WealthManagement.com (Raymond James declined to remark).
Final August, Wells Fargo withdrew its claims towards Bettenhausen, Matty, Schmeski, Stone and Stockton, although the claims towards Raymond James and Rhoades continued to face, in accordance with FINRA. In response, these 5 reps dismissed their counterclaims, which meant the FINRA arbitration panel “made no dedication” on the reduction requested by these reps towards Wells Fargo.
In whole, Raymond James and Rhoades had been discovered to be “collectively and severally liable” for $15.3 million in compensatory damages, in addition to annual 6% curiosity till the penalty is absolutely paid. Moreover, Rhoades was on the hook for greater than $4 million in attorneys’ charges and different prices, and his counterclaim was denied. Raymond James additionally owes a further $1 million in “punitive damages,” in accordance with FINRA.
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