A dispute between Wells Fargo Advisors and a former broker over a recruiting bonus turned ugly last month after hundreds of emails came to light allegedly showing the broker referring business from Wells Fargo to his new firm, according to lawsuit Wells Fargo filed in federal court.
The firm is alleging that William Griffis, a former adviser at the firm who broke away in 2013 to join RCM Wealth Advisors, a Chicago-based registered investment adviser, acted as a “Trojan horse,” funneling business to his new firm for eight months until he officially left, according to the complaint, filed in United States District Court for the Northern District of Illinois. Wells Fargo alleged that RCM and Mr. Griffis breached their fiduciary duty and engaged in a “civil conspiracy” and is asking for more than $1.7 million in compensation and punitive damages.
“This raiding and recruiting lawsuit arises from defendant's concerted and systematic efforts to damage Wells Fargo's business by utilizing a 'Trojan horse' to unfairly compete with the company by funneling business opportunities away from Wells Fargo to RCM when Mr. Griffis was still actively employed with Wells Fargo,” the firm said.
Mr. Griffis and executives at the firm did not respond to requests for comment. An attorney who represented the firm, Thomas B. Keegan of Senak Keegan Gleason Smith & Michaud also did not respond to a call seeking comment.
The case goes back to a dispute over an approximately $200,000 recruiting bonus. Mr. Griffis, who joined Wells Fargo & Co. in 2011, threw the first punch with a suit against Wells Fargo in November 2013 alleging that he should be allowed to keep his bonus because Wells Fargo failed to deliver on the recruiting promises such as referring clients from the bank, and created an inhospitable working environment.
INHOSPITABLE WORK ENVIRONMENT
Mr. Griffis said in the complaint that he “worked for about 21 months in a working environment that was physically unbearable due to poor lighting conditions, heat, poor air circulation, and lack of physical space in which he could work.”
The case was moved to arbitration at Wells Fargo's request and ended in a panel that awarded Wells Fargo $290,000 for the bonus and attorneys' fees in March. An attorney for Mr. Griffis in that case, Elliot Richardson at Korey Cotter Heather & Richardson, did not respond to a request for comment.
It was during that arbitration, however, that Wells Fargo uncovered the additional evidence of “raiding and recruiting” after RCM was subpoenaed in arbitration and had to turn over hundreds of documents and emails, according to the complaint.
The evidence showed that Mr. Griffis was referring business opportunities, including a $250,000 fixed annuity, to RCM for several months before he left Wells Fargo in September 2013, according to Wells' complaint.
“Defendants were elated by the prospect of usurping that business opportunity for themselves,” the firm said in the complaint. “They even provided Mr. Griffis with additional marketing materials for him to distribute to his clients on behalf of RCM while he remained employed by Wells Fargo.”
RCM has around $131 million in advisory assets, according to
SEC filings.
Wells Fargo also said that Mr. Griffis also inflated his annual production by $30,000 in order to obtain a higher recruiting bonus, which was calculated as 70% of his yearly revenue at his previous firm, Edward D. Jones & Co. Wells Fargo said that the discrepancy came out in February during the arbitration and included a word of warning to others who might consider leaving without repaying their bonus.
“Wells Fargo might never have known of [Mr.] Griffis' fraudulent conduct but for the fact that he refused to repay his loan,” the firm said.
