$4-Mln UBS Team Who Joined Morgan Stanley in NY Agrees to Injunction
A Morgan Stanley team in Garden City, New York who had been overseeing around $700 million in client assets before they left UBS Wealth Management USA in April has agreed to their former firm’s request for a customer solicitation ban, according to court filings.
The injunction, which is in effect pending the outcome of a parallel arbitration hearing on a permanent injunction and damages, also requires them to return any customer lists they may have taken or certify that they do not have any in their possession.
The order, which also applies to a client associate, Sheila Natale, does not prohibit them from responding to in-bound client requests or continuing to work with those who have already transferred. The stipulation also does not constitute an admission of guilt or wrongdoing by the parties, the order notes.
Croce, Anders, and Natale did not respond to messages left for through LinkedIn. Their attorney, Jonathan C. Thau of an eponymous firm in New York, declined to comment, as did a Morgan Stanley spokesperson.
The team had generated around $4 million in annual revenue, and was wooed to Morgan Stanley by an offer of $13 million, including $7.2 million upfront cash payments, and $6 million more if they hit ‘back-end targets,’ according to the UBS complaint. Those amounts were calculated respectively based on 180% and 150% of the team’s annual revenue, UBS alleged in the complaint.
Both UBS and Morgan Stanley withdrew more than three years ago from the Protocol for Broker Recruiting, which permits advisors to retain some client-contact information when moving to signatory firms. Lawsuits have been relatively sparse but have been cropping up as the firms both revived their hiring efforts over the past year-and-a-half and have been trading high-end teams.
UBS in December secured a temporary restraining order against a $14-million group that jumped to Morgan Stanley in Boca Raton, Florida. Morgan Stanley was not named as a defendant in either case.
In the Long Island case, UBS alleged that Croce and team had successfully transferred $109 million in customer assets in the roughly two weeks following their April 9 departure. The firm said it commenced an “investigation” into the group’s departure after $13 million transferred within 48 hours of their resignation.
UBS alleged that the team members, when executing their defections, left “nothing to chance” in terms of taking clients with them, emailing client documents to their personal addresses, scheduling pre-resignation calls and meetings with key clients “to solicit and secure commitments to move their accounts to Morgan Stanley” and printing “massive volumes” of confidential client information.
Some of the accounts they had solicited had been reassigned from departing advisors and included their own one-year non-solicitation bans, according to UBS’s complaint.
UBS also alleged Croce “bragged” to a client about his team’s new titles and compensation at Morgan Stanley and “falsely told the client that UBS was not giving him” sufficient sales support.
“Croce’s statement to the client about UBS not giving him adequate sales support was a blatant misrepresentation, particularly given that UBS had made an offer to a new sales assistant for the Croce team who Croce knew personally and recommended for the position,” lawyers for UBS at Jackson Lewis P.C. wrote in the complaint that was backed up by an affidavit from UBS Garden City branch manager Amanda Librizzi.
Croce began his career at Moseley Securities in 1984, moved two years later to Oppenheimer & Co., which he left in 1988 for Smith Barney, landing with Kidder Peabody in 1990, a firm eventually through acquisitions that joined UBS, according to this BrokerCheck record.
Anders began as a wealth planning analyst with UBS in 2013, according to the UBS complaint. His BrokerCheck record shows he worked prior to that for less than one year at a Melville, New York office of AXA Advisors.
Natale began at UBS in 1999, having worked two years previously for Copeland Equities in Somerset, New Jersey, according to her BrokerCheck record.