Wirehouse Morgan Stanley continues aggressively pursuing departing advisors, most recently getting a judge to quickly issue a temporary restraining order against one of its former brokers who left for UBS, according to news reports.
Morgan Stanley claims that David James Sayler pre-solicited clients for weeks prior to his resignation, using mass-mailed thank-you cards, according to a lawsuit filed in U.S. District Court in Oregon, AdvisorHub writes.
“I enjoy working with you and look forward to the years to come,” the cards read, according to the filing cited by the website.
Morgan Stanley says in the complaint that it wouldn’t have approved the cards if it had known that “those ‘years to come’ would be years spent working at another financial firm,” AdvisorHub writes.
Sayler then allegedly followed up with further solicitations after he joined UBS, Morgan Stanley says, according to the industry news website.
UBS and Sayler didn’t return AdvisorHub’s requests for comment and a Morgan Stanley spokeswoman declined comment to the website.
Sayler, who came to the financial services industry in 2006 by joining Morgan Stanley predecessor Smith Barney, was part of a five-advisor team that signed “Former Advisor Program” agreements with an advisor who retired in 2017, according to the suit cited by AdvisorHub.
Such agreements let retiring advisors still take a portion of the fees and commissions paid by their former clients from what’s earned by advisors who inherit the accounts, the website writes.
Sayler left the team in April 2019 and appears to be the focus of the first TRO action that focuses on such agreements, according to AdvisorHub.
District of Oregon Judge Ann Aiken issued a decision just a day after Morgan Stanley submitted its TRO request, ordering Sayler to return all the documents and client information he may have removed from the company and to stop soliciting clients, AdvisorHub writes.
Lawyers say the reason Aiken reached her decision so quickly has to do with the “unusual circumstances” of the case, namely, the fact that Sayler had signed the Former Advisor Program agreement, according to the website.
“The argument appears to be that these are not accounts that the advisor generated, but were given to him by the retiring broker,” Thomas Lewis, an employment lawyer at Stevens & Lee in Princeton, N.J., tells AdvisorHub. “It’s easy for judges to say they’re going to issue a TRO when brokers go after accounts that are subject to an agreement.”
In October 2017, Morgan Stanley announced that it was dropping out of the Protocol for Broker Recruiting, the industry accord that lets departing brokers take some client data with them without threat of lawsuits.
Since then, the wirehouse has filed 15 cases, including Sayler’s, in federal court seeking TROs against its former brokers, as reported.
Morgan Stanley was granted the TROs in eight of those cases and denied only two, while five cases were settled before a ruling could be issued.