Merrill Sues $5.3-Mln Tennessee Team who Joined Wells Fargo
Merrill Lynch Wealth Management has asked a judge to block a group of Wells Fargo Advisors brokers in Nashville, Tennessee from contacting their former customers in violation of their various employment and bank referral agreements.
While Merrill remains a signatory to the Protocol for Broker Recruiting, which allows brokers to take limited customer information and contact customers, customer leads from the bank are carved out from its legal protections, the firm said. The team’s alleged violations thus invalidated Protocol’s protections for “any and all” clients.
“FAs are only entitled to the protections of the Protocol and permitted to solicit the clients they serviced at their prior firm, if they act in good faith during their transition of employment,” Merrill wrote in the complaint.
A spokeswoman for Wells Fargo Advisors, which was named as a defendant along with the four brokers, declined to comment. The brokers, who moved on March 19th and had been generating around $5.3 million in revenue and managed $680 million in client assets, did not return a call for comment.
The case is an unusual filing for Merrill, which remained in the Protocol for Broker Recruiting despite retreating from veteran broker hiring in 2017 and despite the exits of two of its largest competitors, Morgan Stanley Wealth Management and UBS Wealth Management USA that same year. Both Morgan Stanley and UBS filed a number of non-solicit cases in the aftermath of their Protocol efforts.
Merrill’s decision to remain in the Protocol, however, has left it more vulnerable in some cases, recruiters have said. So far this year, it has lost a number of high-profile teams who had been generating tens of millions in annual revenue.
A spokesman for Merrill Lynch declined to comment beyond the complaint.
Merrill said that the brokers’ wrongdoing risked “imminent, irreparable harm” to the firm by “emboldening other FAs to disregard their contractual obligations to the firm” and also could “embolden Merrill’s competitors to tortiously interfere with Merrill’s customer relationships.”
Merrill accused the team of setting up meetings with their former bank-referred customers and sending account transfer packets to several as well. Two customers “reported confusion” to Merrill about the Wells Fargo “solicitation packages” they received.
One large “multi-faceted trust” and family household in particular was likely to follow their team to Wells, Merrill alleged.
Merrill has filed a parallel claim for damages and a permanent injunction against the broker with the Financial Industry Regulatory Authority’s arbitration forum, as is customary in TRO cases.
Merrill was on the other end of a non-solicitation dispute last month in which a former bank-based JPMorgan Chase & Co. broker in New Jersey agreed to not solicit clients referred to him by the bank.