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Fidelity Sues Former Rep's New RIA

May 7, 2018

Fidelity Brokerage Services is suing an RIA whose owner once worked at a Southlake, Texas, Fidelity office, according to the InvestmentNews.

According to the suit, Paul Michel breached fiduciary duty when he left Fidelity in December with proprietary and confidential data that’s now allegedly being used by the firm he started, Provident Financial Planning, the publication writes. Michel allegedly had access to information on around 350 households, representing more than $466 million in client assets with Fidelity, according to the suit filed in a federal court in Fort Worth and cited by InvestmentNews.

Fidelity also claims in its suit that Michel’s RIA “has received the benefit of approximately $25 million in wrongfully diverted assets” thanks to the information Michel took with him, according to the publication.

Fidelity wants Provident to return the client data Michel took when he resigned from Fidelity, and is seeking unspecified compensatory as well as punitive damages, InvestmentNews writes.

This isn’t the first time Fidelity has gone after a departing representative recently. In March, the company sued Merrill Lynch and a former Fidelity representative who allegedly solicited Fidelity clients once he joined Merrill Lynch.

In that case, Fidelity said there were 200 client households at stake representing more than $528 million, and the firm wanted the return of all records as well as injunctive relief from a federal court in Houston. Also in March, Fidelity filed a suit in Ohio against a broker who left one of its call centers for an advice firm, according to InvestmentNews.

Fidelity isn’t alone in attempting to take legal measures to block advisors who jump ship from taking clients with them.

(Getty)

Both UBS and Morgan Stanley left the Protocol for Broker Recruiting last year. Since withdrawing from the accord that allows departing advisors to take some client information without threats of lawsuits, both wirehouses have been seeking temporary restraining orders against brokers who move to competitors.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.