Jefferies Accused of Poaching Rival’s Employees, Clients
(Bloomberg) -- Jefferies Financial Group Inc.’s international arm was sued in the U.K. over allegations it orchestrated a move to poach six employees from an investment bank rival, who took several lucrative clients with them.
Stifel Financial Corp.’s European unit accused the U.S. bank of inducing the people, who worked across banking and sales, to leave in October 2019. It said the ex-workers also took three of its clients, causing it “substantial loss and damage,” according to documents prepared for a London court hearing.
U.K. courts have played host to several high profile poaching lawsuits. Last year, Cantor Fitzgerald LP lost an attempt to have a suit brought by Jefferies dismissed on jurisdiction grounds. As part of the case, Jefferies accused the brokerage of making a “concerted effort” to stop the ex-employees from repaying bonuses it says it was due.
In 2019, BGC Partners Inc. and Tradition agreed to settle a $35 million lawsuit in the middle of its trial over the poaching of a flagship team. The case had featured tales of corporate spying, threats to put a broker in jail and deleted WhatsApp messages.
Stifel said in court documents that Jefferies and the employees worked together “to injure Stifel by unlawful means.”
They agreed steps to “recruit each other for Jefferies, seek to co-ordinate their resignations to cause maximum disruption and uncertainty so as to cause damage” and “facilitate and assist the competing activities of Jefferies,” Stifel’s lawyers said in the filings.
The suit “appears to be retaliation” because it succeeded in recruiting Stifel’s employees “contrary to its wishes,” Jefferies’ lawyers said in prepared arguments for the hearing this week.
They argued that this was “the operation of a normal competitive marketplace and that there was no wrongdoing,” the bank’s lawyers said. Jefferies lawyers said the employees were hired from different departments.
A spokesperson for Jefferies declined to comment. Stifel didn’t respond to a request for comment.
The employees all “resigned on mass,” David Reade, Stifel’s lawyer, said in court this week. “The defendant’s case is that they were moved by the spirit.”
Stifel hasn’t said how much compensation it’s seeking as part of it’s case.
Stifel wants further details of how the employees were approached before it quantifies its loss. Part of this will come from clients it says it has lost to Jefferies as a result of the employee move.
Those clients include Sequoia Economic Infrastructure Fund Ltd., BBGI Management HoldCo Sarl and Foresight Solar Fund Ltd, according to the lawsuit.
Judge Victoria McCloud said the employees were “shipmates” who “jumped into the same lifeboat.”
A trial in the case is expected to take place next year.
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