Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Financial advisor pays $450K to settle Texas conspiracy investigation, (Oct 15, 2014)

By Greg Hammond, J.D.

The Texas Attorney General’s office has reached a settlement with R. Craig Rathmann and his firm, Rathmann & Associates, L.P., resolving allegations that Rathmann conspired with a former employer to eliminate financial advisory services competition in the Houston area. Rathmann has agreed to pay $450,000 instead of a civil penalty, and he will further reimburse the Attorney General’s office for its investigative costs and attorney fees.

Between 1992 and 2003, Rathmann was an employee of RBC Capital Markets, LLC—an indirect subsidiary of the Royal Bank of Canada. However, upon his decision to leave RBC, the two parties allegedly entered into a separation agreement in which they agreed not to compete against each other. In addition, Rathmann purportedly agreed to use RBC as lead underwriter for his clients, and to secure an underwriter’s discount of 1.25 percent of the gross proceeds from the sale of bonds. In return, RBC allegedly agreed not to solicit Rathmann’s financial advisory clients. RBC settled similar allegations with the Texas Attorney General’s office earlier this month, agreeing to pay $990,000 in restitution to 63 municipal utility districts.

The Attorney General’s office alleged that RBC and Rathmann unreasonably restrained competition by entering into the separation agreement, and certain municipal utility districts were consequently deprived of the benefits of competition. In addition to the $450,000 payment, as well as costs and attorney fees, Rathmann is prohibited from entering into similar anticompetitive arrangements in the future, and the firm is further required to inform its clients of their right to choose an underwriter and negotiate its compensation.

Companies: Rathmann & Associates, L.P.; RBC Capital Markets, LLC

News: Antitrust