One of the top four title underwriters will end any “no-poach” agreements it holds with competitors after an investigation by the New York Attorney General.
Stewart Information Services Corp. will pay $2.5 million to the state as part of the settlement announced Thursday by New York AG Letitia James. A probe by the Office of the Attorney General found Stewart entered into no-poach agreements with undisclosed title insurance companies, harming employees’ career opportunities, wages and breaking state laws.
“Businesses that try to hold workers hostage will face the consequences of their illegal actions,” said James in a statement.
The Houston-based firm – which neither admits nor denies the OAG’s findings – will have to produce a compliance program with the office’s approval and for 10 years affirm its assent and notify officials of further violations, per an agreement.
Representatives for Stewart didn’t return requests for comment Friday. The settlement stipulations said the company won’t make or permit any public statement denying, directly or indirectly, any finding in the settlement or suggest it was without legal or factual basis.
Since September 2021, James’ office has ended the use of no-poach agreements by three title businesses, including Old Republic National Title and agreements between AmTrust and First Nationwide. The sector’s alleged dealings to bar soliciting, recruitment and hiring of competitors’ employees are in contrast to mortgage lenders, which have sued each other for raiding employee ranks in a spate of litigation this year.
The OAG interviewed Stewart executives, reviewed company documents, and obtained information and testimony from “other market participants” in its probe, according to the assurance of discontinuance. Stewart had both verbal and written agreements with title insurance agencies and underwriters, the settlement said, although it did not describe in detail any number of agreements nor whether they were still in effect.
The firm won’t enforce and terminate no-poach agreements within 30 days of the assurance, and will pay the $2.5 million within five business days of the agreement. If Stewart knowingly withheld documents related to any other non-poach agreements, it will pay a $1 million penalty. A $50,000 charge will be assessed for every month Stewart is in default of the performance of the assurance, the filing said.
Stewart, among the smallest of the major title firms, reported net income of $29.4 million in the third quarter, a decline from $61.7 million from the second quarter. Its open orders also declined to 86,974 for the third quarter, a significant dropoff from the 144,155 count at the same time last year. In October, the company also closed on its purchase of reverse mortgage specialist FNC Title Services.