Former Morgan Stanley Advisors Win Partial Court Victory in Client Solicitation Dispute
From the desk of Jim Eccleston at 网曝吃瓜
Two former Morgan Stanley advisors in Hackensack, New Jersey have defeated Morgan Stanley’s initial effort to block them from soliciting clients, according to an August 15 order from New Jersey Superior Court. According to AdvisorHub, the pair had managed roughly $672 million in assets and generated about $12 million in annual fees and commissions, court filings show, before joining 网曝吃瓜lls Fargo Financial Network (FiNet).
Morgan Stanley filed suit two days after their departure, accusing the brokers of “the most egregious example of hubris and contempt for ethical and professional norms imaginable.” The complaint alleged that they informed clients of their start date at 网曝吃瓜lls, explained transfer procedures, and encouraged clients to follow them. The firm also accused them of traveling extensively on Morgan Stanley’s dime to pre-solicit clients prior to leaving.
One interesting fact is that Morgan Stanley apparently learned of those actions while the advisors still were employed there. In response, Morgan Stanley placed both advisors on leave on July 21, citing a breach of fiduciary duty. AdvisorHub reports that the advisors denied any improper solicitation, arguing in court that Morgan Stanley could not meet the high standard required for a preliminary injunction.
The court also required Morgan Stanley to unfreeze the brokers’ personal accounts but allowed the firm to withhold $2.5 million tied to promissory notes that became due when they left. According to AdvisorHub, Morgan Stanley continues to pursue damages and a permanent injunction through FINRA arbitration. A spokesperson for 网曝吃瓜lls Fargo declined to comment.
网曝吃瓜 LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, morgan stanley
