FINRA Awards Stephens Inc. $18.2M in Staff Poaching Case


The Financial Industry Regulatory Authority has awarded Stephens Inc. of Little Rock $18.17 million in a dispute over corporate raiding by Benjamin F. Edwards & Co. of St. Louis.

Stephens, a privately held investment bank, filed a complaint with FINRA in 2017 and accused the broker-dealer and investment adviser of poaching four of the six financial advisers who worked in Stephens’ Jonesboro office. The raiding occurred over an 11-month period between 2016-17, the company said. 

While Stephen’s branch has remained open, the lost production of the financial advisers “was well over 50% of annual production,” according to the 35-page FINRA award on Jan. 21. 

Benjamin F. Edwards IV, CEO and president of his namesake company, “clearly expressed an intent to commit an act not allowed within the financial industry,” the award said. “Multiple e-mails and texts evidenced that [Benjamin F. Edwards & Co.] employees, including Edwards, intended to hire the four FAs in violation of their own definition of raiding.”

The former Stephens employees are: Brian Todd Erwin, Timothy Garry Fitzgerald, Jeffrey Lynn Green and Malcolm Andy Peeler. 

“They all agreed that taking all four FAs was improper,” the filing said. “They simply disagreed that it was one continuous plan.”

More: Click here to read the 35-page award document.

In a 2-to-1 ruling, the independent arbitrators found that Stephens suffered a loss of net profits as a result of the wrongdoing and loss of business. The arbitrators also ruled in Stephens’ favor on its other allegations of wrongdoing, including breach of contract. 

FINRA awarded Stephens $10.97 million in compensatory damages and $5 million in punitive damages. Benjamin F. Edwards & Co. and Edwards are each responsible for $2 million of the punitive damages. Peeler is liable for $1 million of the punitive damages.

FINRA also awarded Stephens $2.2 million for attorneys’ fees. Stephens was represented by attorneys Daniel Wirth and Joseph Alonso of Gregory Doyle Calhoun & Rogers LLC of Marietta, Georgia.

Curt Bradbury, Stephens’ chief operating officer, said in a statement to Arkansas Business that Stephens was pleased with the ruling. 

“We felt strongly that Benjamin F. Edwards & Co.’s conduct toward our Jonesboro office constituted raiding and ignored accepted standards of recruiting in our industry,” he wrote. “Raiding violates the most fundamental principles of fair competition in our industry, as does a failure to honor one’s contractual obligations."

Benjamin F. Edwards filed a counterclaim against Stephens over an allegation of a breach of the broker protocol, but the arbitrators said it was without merit.

In a statement, a corporate spokesperson said Benjamin F. Edwards would challege the award. 

"We vehemently disagree with the decision of the panel and intend to challenge the award," the spokesperson said. "We believe we conducted ourselves properly during the recruiting process and believe this is supported by the strong and well-reasoned dissent of one of the three arbitrators."

Benjamin F. Edwards & Co. and its employees were represented by attorneys Eric Martin and Jeffrey Kalinowski of Bryan Cave Leighton Paisner LLP of St. Louis.