Baird Ordered to Pay Morgan Stanley $700,000 to Settle Recruiting Case

In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed by David Brodie and Laura Starr in March 2010, Claimant Morgan Stanley Smith Barney asserted

Count I: unfair competition/raiding

Count II: aiding and abetting a breach of fiduciary duty

Count III: misappropriation of confidential information

Count IV: tortious interference with advantageous business relationships and contracts; and,

Count V: breach of promissory note against Respondent Paul McWane

The causes of action relate to Respondent Baird’s recruitment and employment of several of Claimant’s Lynchburg, VA, branch employees and to Respondent McWane’s alleged failure to make repayment of the balance of a Promissory Note dated February 12, 2009 (“Note”). In the Matter of the FINRA Arbitration Between Morgan Stanley Smith Barney, LLC, Claimant, vs. Robert W. Baird & Co. Incorporated and Paul McWane, Respondents (FINRA Arbitration 10-01187, November 21, 2012).

Claimant sought compensatory damages, punitive damages, attorneys’ fees, and costs against Respondent Baird. Additionally, Claimant sought the return of all documents relating to its Lynchburg office clients obtained by Respondent Baird. As to Respondent McWane, Claimant sought $107,448.90 in compensatory damages, plus interest, costs and attorneys’ fees as provided in the Note.

Respondent Baird generally denied the allegations and asserted various affirmative defenses.

One Down

Claimant voluntarily dismissed Count V of Statement of Claim, and, accordingly, Respondent McWane was dismissed with prejudice.

Decision

The FINRA Arbitration Panel found Respondent Baird liable and ordered the firm to pay to Claimant Morgan Stanley Smith Barney $700,000.00 compensatory damages plus 6% per annum interest from December 1, 2012 until the Award is paid.