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Robert W. Baird & Co. Fined $17.8 Million for Unfair Competition

Robert W. Baird & Co. Fined $17.8 Million for Unfair Competition

The asset and wealth management firm Robert W. Baird & Co. along with 20 of its employees have been fined $17.8 million plus interest, with the money awarded to Gleacher & Co., a dissolved investment firm, for alleged unfair competition and solicitation.

The order, among other claims related to employees who left Gleacher for Baird, was imposed by a Financial Industry Regulatory Authority Inc. (FINRA) arbitration panel.

Gleacher, which dissolved in 2014, is now solely winding down its operations.

Unfair Competition and Solicitation

Five of the 20 Baird employees have been ordered to pay at least $50,000 plus interest, and the firm has been ordered to pay $13 million in compensatory damages and nearly $4.6 million in attorney and consulting fees.

Baird denied the allegations. John Rumpf, a Baird spokesperson, said the firm disagrees with the finding and is extremely disappointed in the outcome. He added that the fine will have no impact on the firm’s financial results.

Rumpf said that the penalized associates are important additions to the firm’s overall fixed income capital markets platform.

Who Owns the Client?

Industry executives frequently debate the issue of unfair competition. Bill Singer, an attorney who specializes in the financial services industry, points out that an age-old problem on Wall Street is the question of who owns the client: the stockbroker or the company?

While firms sometimes argue that an employee who leaves is stealing clients, regulators often decide on a case-by-case basis.

Singer said that it’s important for advisers to leave a brokerage firm in a proper manner so they won’t get sued.

The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.

Source: Investment News