Wells Fargo loses another raiding case to Stifel Nicolaus

Wells Fargo Advisors LLC has been ordered to pay $948,000 in legal fees and costs to Stifel Nicolaus & Co. Inc. and a former branch manager after it lost a dispute with Stifel involving the hiring of four brokers from A.G. Edwards.

A Financial Industry Regulatory Authority Inc. arbitration panel denied a claim by A.G. Edwards & Sons Inc., now part of Wells Fargo, that it was harmed when the brokers and a sales assistant went to Stifel.

The panel ordered Wells Fargo to pay $633,000 in attorneys’ fees to Stifel, and another $282,000 in attorneys’ fees to Chris Nielsen, the former A.G. Edwards branch manager in Grass Valley, Calif., who left in October 2007 with several A.G. Edwards brokers to set up shop for Stifel.

In a 2007 court filing, A.G. Edwards claimed that the brokers produced $1.6 million and had $220 million in client assets.

Mr. Nielsen, in turn, claimed he had been defamed by Wells Fargo and Gene Diederich, director of branches at A.G. Edwards.

The arbitration panel, in an order issued May 7, ruled in favor of Stifel and denied A.G. Edwards’ claim.

“We’re disappointed,” said Wells Fargo spokesman Tony Mattera.

But Stifel chief executive Ron Kruszewski said that he is disappointed that Wells Fargo “continued to sue people who were encouraged to explore their options [and] did so.”

The Grass Valley suit is one of several arising between A.G. Edwards and its successor firms, and Stifel. A number of A.G. Edwards brokers deserted ship in the wake of the 2007 takeover of Edwards by Wachovia Securities LLC.

In December, Wells Fargo was ordered to pay $1.1 million in legal costs to Stifel in a South Carolina case involving four legacy A.G. Edwards brokers.

In the South Carolina case, the arbitrators said that Wells Fargo attorneys may have misled a South Carolina federal court about video surveillance used as evidence against the brokers. The video was used to help get a restraining order against the brokers.

Wells Fargo has sought to vacate that arbitration ruling. A court hearing on the matter was scheduled for last Thursday.

E-mail Dan Jamieson at [email protected].