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.
