Wells Seeks to Handcuff $300-Mln-Asset Duo Who Joined RBC Last Week
Wells Fargo Advisors asked a court to impose a temporary restraining order against two Florida brokers who joined RBC Wealth Management on Friday, alleging they violated their employment contracts by soliciting clients before they resigned and using personal emails to collect account data.
Wells, which unlike competitors such as Morgan Stanley and Merrill Lynch does not have a sustained history of litigating against fleeing brokers, asked a federal judge to prohibit Brady Pedler and Joseph Santana from calling their former clients, according to a complaint filed in the U.S. District Court in the Middle District of Florida four days after their move.
“Among other violations, they solicited WFA clients to move to RBC while still employed by WFA” (emphasis included),” according to the complaint. “Remarkably,” Pedler forwarded marketing materials about RBC’s trustworthiness and financial strength to clients “while still being paid by WFA” on July 23. The emails, which the firm attached as exhibits, included brochures about “RBC Strength You Can Trust” and “RBC S&P Strength.”
Wells Fargo and RBC remain members of the Protocol for Broker Recruiting that permits advisors to take rudimentary client-contact information when they move to other signatory firms. But lawyers said that advisors who make egregious errors, such as pre-soliciting, are vulnerable to prosecution by firms in the crucial early days of their attempts to restart their practices.
Neither Pedler, who managed $247 million of the team’s assets, nor Santana, returned requests for comment. They had been with Wells since 2006, which they joined from Merrill Lynch, according to their BrokerCheck histories.
A spokeswoman for RBC, which was not named as a party in the complaint, did not immediately return a request for comment.
As is typical with motions for solicitation TROs, Wells has concurrently filed a complaint for an injunction and damages against the brokers with the Financial Industry Regulatory Authority’s arbitration arm.
A spokeswoman for RBC, which was not named as a defendant in the court complaint, did not immediately return a request for comment.
In addition to allegedly abusing the “substantial investment” it made in developing the two advisors’ practices—“hundreds of thousands in upfront money” and “further generous compensation and support”—Pedler and Santana jeopardized account inheritance agreements, according to the complaint. They owed monthly payments through 2023 to former advisor Allen Steinfeld, who retired in 2017, and were barred from soliciting those clients for at least a year, the complaint said.
One Wells client allegedly said the brokers on a phone call before the move “touted the many ways” that RBC was superior.
“Remarkably,” Wells’ complaint noted, Pedler even forwarded RBC marketing materials to clients “while still being paid by WFA” on July 23. The emails, which the firm attached as exhibits, included brochures about “RBC Strength You Can Trust” and “RBC S&P Strength.”
Wells, which has been struggling to restore its reputation with consumers since disclosing its opening of fake bank accounts and other aggressive tactics three years ago, said that Pedler and a client associate also “created an abnormally large number of labels” with client data that they sent to the advisor’s personal email address months before his departure.
The brokers violated their nonsolicitation agreements and “breached their fiduciary duties to WFA,” the complaint said. The alleged violations caused the broker “irreparable injury,” it said, a legal concept routinely invoked by brokerage firms seeking injunctions against a harm that cannot be satisfied by monetary compensation.
The concept suffered a setback in another TRO case last week where a Michigan federal judge reversed her injunction against a former J.P. Morgan Securities broker who joined Ameriprise Financial.
“I don’t see how you could come to the conclusion that a single financial advisor in a small branch bank…could inflict irreparable harm on a financial giant like J.P. Morgan,” Judge Janet T. Neff said, according to a transcript of the August 19 hearing. She characterized the bank’s claim as “almost laughable.”