August 22, 2016 Articles

Settling Raiding Cases in the Securities Industry

By Dana N. Pescosolido

Raiding (hiring groups of brokers/producers from the competition) in the securities industry has been going on for decades. When it happens, the “victim” firm often files an arbitration case with the Financial Industry Regulatory Authority against the “raiding firm.” Historically, these cases have been relatively difficult to settle for four main reasons: 

1. Disagreement in the industry over what constitutes a compensable “raid.”
2. A lack of understanding as to how arbitration panels have historically ruled on such claims. While a few cases have gained notoriety, the majority of cases go largely unnoticed.
3. Unrealistic damages estimates.
4. Unique characteristics of raiding claims that represent barriers to settlement.

This article attempts to address these four issues by reference to prior pubpshed material and a recently completed study by the author of “raiding” awards since 1988. 

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