UBS Broker Sued By Morgan Stanley Agrees to Customer Solicitation Ban
An ex-Morgan Stanley broker in Colorado and New Jersey has agreed to an order blocking him from soliciting former customers governed by team agreements, according to a stipulated preliminary injunction filed in federal court in New Jersey.
Morgan Stanley, which said Crotty generated $2.75 million in annual revenue on $540 million in customer assets, did not specify which portion of his book consisted of shared accounts, but filed as evidence agreements that list redacted names for hundreds of customers shared with former Crotty Group partner Howard Shallcross, who remains at Morgan Stanley.
Crotty, a 26-year industry vetreran, can still process in-bound account transfer requests, serve those who have already transferred accounts and solicit family members, according to the order, which was signed by both parties and approved by a judge on Monday.
Crotty’s lawyer, Jeffrey I. Wasserman in New Jersey, did not return a call for comment. The order notes that the stipulation does not constitute an admission of wrongdoing.
Spokespeople for Morgan Stanley and UBS both declined to comment. Shallcross, who has 21 years of experience and is based in Shrewsbury, New Jersey, according to BrokerCheck, declined to comment.
Morgan Stanley last week claimed Crotty violated the one-year non-solicit ban included in the joint production agreements and also said that he had pre-solicited at least four clients, including his largest customer, to join him at UBS. Morgan Stanley appeared particularly piqued by Crotty’s submission of expense reimbursement requests for trips he made to New Jersey during which he had allegedly pitched customers about his upcoming move.
Crotty, per the order, must also return to Morgan Stanley any of the firm’s confidential information–including account numbers, account information, investment history, risks, management fees, rates and profiles–and all other information he may have retained upon departing Morgan Stanley that was not voluntarily disclosed by clients after he joined UBS.
Crotty, who at UBS works primarily from its Boulder office, also uses the wirehouse’s office in Manasquan, New Jersey. He had maintained offices in Boulder and Shrewsbury, New Jersey while at Morgan Stanley, according to the firm’s complaint.
Crotty’s practice was started by his father nearly six decades ago, according to the broker’s bio on UBS’ website. He had joined his father at Merrill Lynch in 2000 and took leadership of The Crotty Group in 2005, according to the bio.
Both UBS and Morgan Stanley in 2017 withdrew from the Protocol for Broker Recruiting, which permits advisors to retain some client-contact information when moving to signatory firms and is aimed at reducing litigation, but non-solicitation cases have flared up as each have revived their recruiting efforts over the past year-and-a-half.
Morgan Stanley in January blocked a $6 million-producing New Jersey team from encouraging its former clients to join them at RBC Wealth Management-U.S. That litigation had followed a lull in non-solicitation and trade secret suits against defecting brokers filed by Morgan Stanley during the prior year.
At least two of Morgan Stanley’s own recruitments of large teams have landed in court in recent months. A $4 million-producing team in Garden City, New York that joined from UBS in April agreed the following month to a customer solicitation ban. In December, a judge issued a temporary restraining order against a $14 million team in Boca Raton, Florida, that had also joined from UBS.