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Did Morgan Stanley's Protocol Surprise Hasten These Rep Exits?

November 6, 2017

Morgan Stanley’s decision to exit the Broker Protocol effective November 2 caused many of its brokers to accelerate their transition to rivals, insists AdvisorHub. Yet others believe the process of leaving a firm is too protracted for teams to move so suddenly.

JPMorgan picked up a New York team headed by Colleen O’Callaghan, who managed around $3 billion at Morgan Stanley, a JPMorgan spokeswoman tells the industry website. O’Callaghan had been with Morgan Stanley since 2008, chaired the company’s Private Wealth Advisor Council and was ranked as the top woman financial advisor in 2017 by Forbes, according to AdvisorHub, which cites the team’s former website. In addition, JPMorgan picked up two Morgan Stanley brokers in Dallas, AdvisorHub writes. Joel Tannebaum, who’d been with Morgan Stanley since 2000, produced close to $2 million, while Dale Mitchell, who’d joined Morgan Stanley Dean Witter in 2006, had around $1.1 million in production, according to the website. Tannebaum was planning to move next week but decided to depart more quickly because of the Protocol exit, AdvisorHub claims.

Likewise a group of Boston brokers who had planned to move from Morgan Stanley to JPMorgan in December also left on Thursday following the announcement, a source tells the website. Frank Botta, Daniel McCarron and Mike Coyne managed $1.1 billion at Morgan Stanley, according to AdvisorHub. JPMorgan also nabbed a trio of Morgan Stanley’s private wealth unit reps in Boston who were operating as The Corbett Mason Group, AdvisorHub writes. L.O. Patrick Corbett, Robert Mason and Daniel Warren had managed $1.2 billion at Morgan Stanley, the JPMorgan spokeswoman tells the website.

Stifel Financial, meanwhile, has hired Morgan Stanley advisors Ken Ramos and Gary Rudow in New York, AdvisorHub writes. Ramos and Rudow oversaw $325 million, according to the website. Stifel also picked up veteran advisor Henry Enno, who’s been in the industry since 1986 and with Morgan Stanley since 2009, AdvisorHub writes. Enno tells the website he’s a million-dollar producer.

Other smaller firms tell AdvisorHub they’re about to make announcements regarding hires from Morgan Stanley. And several Morgan Stanley brokers tell the website that some of their colleagues are hurrying up their transition to other wirehouses or banks but declined to give names.

Meanwhile, Morgan Stanley is on the hook for $1.2 million for how it recruited a broker from a firm that’s not a signee to Broker Protocol. Last week, a Finra panel ordered Morgan Stanley to pay $360,000 in compensatory damages, $600,000 in punitive damages and $289,524 in attorneys' fees to Schwab over the recruitment of one of its brokers, in a case filed in March 2016, InvestmentNews writes. The panel ruled that Morgan Stanley Smith Barney had “misappropriated” trade secrets such as contact and financial information of clients when it hired a rep identified only as “Mr. Q,” according to the publication. Schwab, which hasn’t signed on to the Broker Protocol, claimed that Morgan Stanley had induced Mr. Q to bring his client list and his clients to Morgan Stanley, InvestmentNews writes. Morgan Stanley didn’t respond to the publication’s requests for comment. A Schwab spokesman tells InvestmentNews that the firm is “pleased” with the panel’s decision.

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Separately, a former Morgan Stanley broker is suing the firm alleging anti-semitism, the New York Post writes. Michael Pellegrino says he was “constantly bullied, disparaged and caused to feel inferior” because of his Jewish clientele, according to the suit cited by the paper. According to Pellegrino, Evan Boucher, Morgan Stanley’s executive director of compliance, had “interrogated” him in 2016 over his relationship with Orthodox clients, the Post writes. Pellegrino was fired in December 2016, according to the suit cited by the paper.

“They didn’t like the fact that my client was getting involved with a religious community that they considered untrustworthy,”Paul Liggieri, Pellegrino’s lawyer, tells the Post.

Boucher declined comment to the paper.

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