Stephens Inc. sues five departed analysts.(BANKING & FINANCE)

On the same day last week that Stephens Inc. announced it had "restructured its investment research on the transportation industry," the Little Rock investment firm sued in a Virginia federal court five analysts who had previously been part of that analysis team.

The complaint, which was filed July 15 and amended last Monday, claims the transportation analysts, working in Richmond, Va., and Charlotte, N.C., violated confidentiality agreements while making plans to move enmasse to a competing firm, Scott & Stringfellow Inc. of Richmond. Scott & Stringfellow is a subsidiary of publicly traded BB&T Corp.

Four of the five were fired on July 7, according to the complaint, and a fifth resigned the next day. Four of the five were employed by Scott & Stringfellow as of last Monday, and the lawsuit says they are believed to have been "offered compensation packages with a yearly value in excess of $1.5 million." The fifth was expected to join the others.

In the lawsuit, Stephens acknowledges that "the parties are bound ultimately to arbitrate their disputes before the Financial Industry Regulatory Authority." However, FINRA doesn't entertain requests for injunctive relief, and one of the goals of the civil suit is to force the defendants to "return forthwith" all of Stephens' proprietary information and other company property.

The defendants are Thomas S. Albrecht, Kevin Sterling, Bradley D. Shiveley, Edward "Neal" Deaton, who are now employed by Scott & Stringfellow, and Alfred Rhem Wood Jr. Albrecht, Sterling and Deaton were hired by Stephens in 2005, while Wood was hired in 2007 and Shiveley in 2008.

Albrecht, who was a transportation research analyst in Richmond, is singled out as having made special efforts to steal business from Stephens while still on the Stephens payroll. Among other things, he is accused of "contacting clients with whom Stephens had pre-arranged 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."

Along with its complaint, Stephens filed a letter from Wood's Richmond lawyer that accompanied three boxes of documents that both parties agreed belonged to Stephens. The lawyer, G. William Norris, said he would not comment on the litigation.

The defendants have not yet responded to the complaint and none could be reached for comment last week. A spokesman for Stephens Inc. declined comment.

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