Scott & Stringfellow, the investment-banking subsidiary of BB&T, is being sued for stealing clients and company secrets as it recruited analysts from a competitor’s Richmond office.
Stephens Inc., an investment bank based in Little Rock, filed a lawsuit in U.S. District Court in Richmond last week against five former analysts who left the firm’s West End office to take higher-paying jobs at Scott & Stringfellow.
The suit also names Scott & Stringfellow as a defendant and alleges that the firm is using information provided by the analysts to take business from Stephens.
The lawsuit seeks a court order for Scott & Stringfellow to turn over all documents belonging to Stephens.
According to the suit, four of the five analysts have been employed by Scott & Stringfellow with a collective compensation package exceeding $1.5 million a year.
Employees have the right to leave one firm for another. But if the allegations are true, the analysts broke a rule of taking a new job: Don’t take anything from your old job with you.
The analysts are accused of breaching contract by contacting clients and soliciting them to follow them to Scott & Stringfellow, copying paper and electronic records for use by Scott & Stringfellow, and taking original documents and other property from Stephens, all while employed by Stephens.
The documents covered such sensitive information as client names, business volume, pricing information, pricing arrangements with individual clients, business plans, profit projections and industry analyses.
The documents in question were considered trade secrets in confidentiality agreements signed by the analysts. The agreements stated that disclosure of such information would cause Stephens to “suffer immediate and irreparable harm and that monetary damages will not be adequate to compensate Stephens or to protect and preserve the status quo.”
The analysts, Thomas S. Albrecht, Kevin Sterling, Bradley D. Shiveley, Edward “Neal” Deaton and Alfred Rhem Wood Jr., were members of a research analysis team that focused on the transportation industry. They worked from their office in Henrico, with the exception of Deaton, who worked remotely from Charlotte.
A Stephens spokesperson said they would not comment on the lawsuit, and Scott & Stringfellow did not return calls seeking comment.
Gilbert E. Schill Jr. of McGuire Woods is the attorney for four of the analysts, and David Constine III of Troutman Sanders is representing Scott & Stringfellow. Neither attorney returned calls for comment. A fifth analyst is represented by William Norris Jr. of McSweeney, Crump, Childress & Temple.
Stephens is represented by the law firm Nixon Peabody.
In May, the chief transportation industry analyst at BB&T Capital Markets (the research division of Scott & Stringfellow) left for another firm. At that point, Scott & Stringfellow began searching for a replacement.
The suit alleges that Albrecht was first to begin talks with Scott & Stringfellow and paved the way for the other analysts to follow. Albrecht, who began work at Stephens in 2005, was previously employed by BB&T Capital Markets, according to a news release from 2000 announcing his post.
Among the charges are that Scott & Stringfellow encouraged Albrecht to take clients with him.
From the suit:
Scott & Stringfellow intentionally induced Defendant Albrecht to interfere with the relationship or expectancy by, inter alia: contacting clients with whom Stephens had prearranged business engagements, informing those clients that Mr. Albrecht would be handling these engagements for Scott & Stringfellow, and arranging for a jet charter and other logistical arrangements to permit Scott & Stringfellow to usurp these opportunities.
On July 7, Albrecht, Sterling, Shiveley and Wood were fired after research director Nikolai Fisken, who is based in Little Rock, discovered the extent of their activities.
Deaton resigned the following day.
In a sworn deposition, Fisken said he became aware that Scott & Stringfellow had contacted Albrecht and Alex Brand, another analyst who stayed with Stephens, about possible employment. On June 1, he called Albrecht to discuss what he had heard.
Albrecht said that he was considering his options but that he had more reasons to stay with Stephens, according to Fisken.
On June 25, Fisken said, Albrecht told him he had a verbal offer from Scott & Stringfellow of seven figures in cash for two years, a substantial increase in his pay. According to Fisken, Albrecht then asked, “What can you guys do?”
On June 28, Fisken delivered the company’s answer.
From the deposition:
I told him that we wanted him to stay, that we were still considering enhancing our Transportation Industry Team, that he was Stephens’ highest paid Research Analyst and would continue to be, and that his compensation would continue to grow as we grew.
In short, Stephens wasn’t ready to offer Albrecht more compensation at the time. Fisken said that Albrecht was “surprised and dismayed.” Still, Albrecht told Fisken he was leaning toward staying.
Then, on July 6, he got a call from Sterling, one of the other analysts named in the suit, who told him that he was being offered double compensation from Scott & Stringfellow. Sterling also said that Scott & Stringfellow was planning to deliver offer letters to the analysts July 8.
Fisken flew to Richmond the next day, and after some discussion fired Albrecht and the others.
So far three boxes of documents have been returned by one of the defendants, but almost 1,000 pages of electronic records have not been recovered.
In all, the lawsuit brings 12 counts against Scott & Stringfellow and the analysts.
The defendants have not filed an answer to the complaint.
