Morgan Stanley Suffers TRO Defeat
Wirehouse Morgan Stanley has changed course in its pursuit of a large team of advisors in Michigan who recently left the firm, withdrawing its temporary restraining order claim against them, AdvisorHub writes.
The wirehouse has withdrawn its motion for a TRO as well as a preliminary injunction against a team of eight advisors led by Patrick O’Neill, who allegedly oversaw $337 million, according to the industry website. Morgan Stanley agreed in the U.S. District Court in Eastern Michigan to proceed through Finra arbitration on its breach-of-contract and other claims, AdvisorHub writes. O’Neill and his team, meanwhile, can now tell their former clients that they’re setting up as independent advisors and affiliating with Raymond James Financial Services, a lawyer for the team tells the website.
Morgan Stanley apparently changed its mind after the brokers argued that the wirehouse didn’t serve any evidence of them stealing trade secrets, improperly soliciting customers, taking data or leaking their plans, AdvisorHub writes.
The brokers argued also that Morgan Stanley didn’t enforce employment agreements when it was luring reps for years before dropping out of the Protocol for Broker Recruiting in November, and therefore waived its right to enforce such contracts now, according to the website. O’Neill, for example, was able to bring with him most of the 450 accounts he managed at UBS Financial Services when he jumped ship to Morgan Stanley in 2008, according to the court argument cited by AdvisorHub.
A Morgan Stanley spokeswoman declined comment to the website while the lawyer for the brokers tells AdvisorHub they’re “happy with the results.”
Morgan Stanley has won at least four temporary restraining orders and preliminary injunction orders out of the five it’s filed as of the end of January. The firm has been seeking TROs against departing advisors since it left the broker protocol, which permits departing reps to take some client information with them without threat of lawsuits, as reported.
The law firm representing O'Neill and his fellow advisors says that the decision of this case in favor of the departing advisors rather than their former firm is a "prime illustration" of the value of seeking strong legal advice, according to AdvisorHub.