Morgan Stanley Prevails in TRO Standoff with $6-Mln RBC Team
Morgan Stanley Wealth Management has notched a win in its campaign to block a New Jersey team with $6 million in annual production from encouraging their former clients to join them at RBC Wealth Management-U.S.
“The court has concluded that only the plaintiff has demonstrated that temporary injunctive relief is warranted,” Judge Ann E. Thompson wrote in the order, which did not elaborate on the reason for her decision, which came after a hearing on Thursday in U.S. District Court in New Jersey.
The solicitation bar does not apply to immediate family members of the brokers or to clients that Arthur and Wade Martin had served prior to their joining Morgan Stanley in 2010 from UBS. It will remain in place until a Financial Industry Regulatory Authority arbitration panel rules in an expedited hearing on whether to extend the TRO as a permanent injunction and on Morgan Stanley’s damage claims.
A spokesperson for RBC did not return a request for comment, and the brokers’ attorney, Thomas B. Lewis of Stevens & Lee, declined to comment.
Morgan Stanley brought its claim January 13 and accused the team, which moved in early October, of “rampant” client calls and of sending a mass mailing to their customers in violation of their employment agreements and trade secret clauses. The firm acknowledged that the team was allowed to solicit clients with whom they had worked prior to joining Morgan Stanley but said that their communications had reached names outside of that list.
The brokers two days later filed a counter-motion denying Morgan Stanley’s allegations and claiming that the firm promised them verbally and contractually that it would not try to hold onto clients that the team had serviced prior to 2010. Those relationships comprised 80% of the clients in their $600-million book, the brokers said.
The brokers’ counter-motion also alleged that Morgan Stanley is violating Finra’s 2019 guidance on communicating with former brokers’ customers by telling them Arthur Martin, Wade’s father, had retired and could not be located.
A spokesperson for Morgan Stanley did not return a request for comment.
The case came after a lull in non-solicitation and trade secret suits from Morgan Stanley over the past year. The wirehouse brought more than a dozen legal cases in the months following its late-2017 withdrawal from the Protocol for Broker Recruiting but has eased litigation as it re-upped its recruiting from other firms in 2020.
“The court has concluded that only the plaintiff has demonstrated that temporary injunctive relief is warranted,” MS owns the client. Thankfully, no one but my team will ever own our client relationship. You can leave, do it wisely, and never have an issue. Be careful.
They had enough time to take everyone and start the process. And I’d be sending client links to this article to explain how these firms work. I already tell my clients to read this site each day so they’ll know when I leave what to expect of my firm.
If the team broke the law, or at least FINRA rules, shouldn’t regulators find out if management encouraged it? Up to what level of management? Breaking the rules must be a policy violation at RBC? And a policy violation would require termination and forfeiture of their entire WAP balances. Entire.
Anything can and usually does happen when you are a W2 employee chasing the next carrot. Wake up and take charge…Be the boss and really own your book. Until then, these things will continue to plague you “employees”.
1099 Planner is spot on. Why would any rational clear thinking individual choose to give away 60% of their revenue and be treated like manure? Once you decide to transition from W2 to 1099, you’ll be graduating and moving your book to the Major Leagues. Your clients will follow. The wire is ripping off both you and your clients.