Minneapolis-based brokerage John G. Kinnard & Co. was awarded a record 16.5 million dollars by a three-person NASD arbitration panel in December in a case that accused Dain Rauscher of a premeditated raid of Kinnard employees.
According to the Securities Arbitration Commentator newsletter, the 16.5 million dollar award is the largest ever in a case of Wall Street raiding.
Dain Rauscher is appealing the case.
Kinnard claimed that Dain Rauscher improperly hired the branch manager of Kinnard's St. Louis Park, Minn., office. The manager was accused of sharing confidential information about employees in three Kinnard offices in Minnesota and then raiding the top producers. Dain was accused of hiring more than a dozen Kinnard brokers to staff its new offices in North Oaks and Thief River Falls, Minn.
Kinnard's attorney, Joseph Anthony, claimed the raid took brokers with 6 million dollars in production--20 percent of Kinnard's annual revenue. He says Dain caused Kinnard reps to breach employee agreements that contain noncompete restrictions.
One of Dain's attorneys, Walter Saurack, refused to comment on the case.
"Clearly, Dain violated industry standards," Anthony says. "You can't share names, commissions, confidences and other matters and still be under contract, watching out for your employer's assets. ... We feel very confident that the decision will stand up under appeal."
The record award came after 17 days of hearings conducted between June 21 and Oct. 14 in Minneapolis. Dain is liable for 9.1 million dollars in compensatory damages, 7.1 million dollars in punitive damages and almost 350,000 dollars in attorneys' fees.