Raymond James and three of its wealth managers have to pay their industry rival Baird more than $5 million over their alleged "raiding" of a star advisory practice more than two years ago.
A Financial Industry Regulatory Authority arbitration panel on Monday ordered Raymond James and the three leaders of The Wise Investor Group of Raymond James to pay $5.25 million in compensatory and punitive damages after Baird alleged that
At the time of its move, the then-14-member team had been managing about $2.8 billion and producing more than $20 million in annual revenue at Baird.
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As is common in FINRA arbitration decisions, the panel that handed down Monday's ruling didn't go into its reasons. The award against Raymond James consists of roughly $4.2 million in compensatory damages for alleged violations of FINRA's fair practice rules and tortious interference in contracts and business expectations, as well $350,000 in punitive damages. Smith separately has to pay $282,564, Hamilton $248,104 and Aime $158,511, all for alleged breaches of contract.
Meanwhile in a counterclaim, Wise Investor Group accused Baird of engaging in "a vicious, multi-pronged, ongoing campaign to damage and defame WIG and its members." Baird was ordered to pay $500,000 for alleged violations of
Neither Baird nor Raymond James responded to requests for comment. The Wise Investor Group also did not return a phone call seeking comment.
The case shows the legal risks firms can run when recruiting advisory teams from rivals.
"Other times, they'll just poach such a significant business unit from another firm that it's viewed as unfair competition," Herskovits said.
Wise Investor Group now has 17 members, according to
On a video on Wise Investor Group's website, Hamilton said the group chose to move Raymond James after spending 15 years at their previous firm and wanting to see what other options were out there.
"Raymond James gives us the complete freedom to simply provide objective advice and do what's best for you," he says. "We can have meaningful conversations about your wealth and goals that you want to have — not what a financial institution tells us you need to have."
Wise Advisor Group is also well known in its region for a popular radio show and now
At Baird, the team also felt they had "reached a point where they were outgrowing the firm and could no longer serve their ultra- and high net worth clients to the best of their abilities," according to the post. "Simon and Greg indicated that the technology and infrastructure were outdated and, ultimately, they were not getting enough value for what they were charged."
