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Soured Siebert, Intuit Alliance Leads to Suit

Angered by what it has characterized as a "lack of commitment" to a strategic alliance, Siebert Financial subsidiary Muriel Siebert & Co. said Thursday that it will seek $44.4 million in damages from erstwhile partner Intuit .

The stock brokerage firm filed a suit in the New York Supreme Court late Wednesday which alleged breach of contractual obligations, breach of fiduciary duties, misrepresentation and/or fraud, and other claims, all surrounding the two companies' Quicken Brokerage powered by Siebert strategic alliance. Siebert said it is seeking $11.1 million in compensatory damages and $33.3 million in punitive damages.

The two firms sealed their strategic alliance on April 29, 2002, Siebert said, noting that the agreement was essentially a co-brokerage deal between the two companies.

"Intuit approached Siebert & Co. because Intuit had planned to enter into the brokerage industry in a meaningful way," Dean Yuzek, a partner with Ingram Yuzek Gainen Carroll & Bertolotti, which represents Siebert, said in a statement Thursday.

"Going through the motions and appearing to support the strategic alliance was an inconsequential investment for a billion dollar company like Intuit," Yuzek said.

But the complaint claims Intuit then shied away from that strategy, instead focusing on small business and tax. Siebert said that turned the alliance into a "complete failure," which cost it millions of dollars.

Intuit "unilaterally changed the original Business Model projections downward" after Quicken Brokerage launched in September 2002, the complaint alleged. It added that the software company allegedly failed to properly market the joint brokerage product in accordance with the strategic alliance agreement.

Further, the complaint alleged that Intuit failed to support the alliance because the deal had put pressure on its relationships with Schwab, Fidelity and other Siebert competitors.

Intuit was not prepared to comment on the suit.

"We haven't been served yet, so we haven't seen the lawsuit," Intuit spokesman Michael Runzler told internetnews.com. "It's just our policy not to comment on pending litigation."

However, Intuit spokesperson Veronica Skelton noted that Intuit's lawyers had examined the announcement Siebert issued about the suit. "The claims are untrue," she said.

Skelton noted that Quicken Brokerage powered by Siebert remains active, but the alliance is in the process of dissolving.

"We believe that the reason the alliance is being terminated is that it was a great idea to provide our customers with tax-informed investing insight that just came during the wrong economic conditions," she said.