Blocked from Calling Clients, Ex-Morgan Stanley Broker Loses New Job
Bank Leumi has fired a broker in Florida who worked for less than a week at its private client unit after a court approved a stipulated restraining order prohibiting him from contacting his former Morgan Stanley clients for a year, according to a court filing.
The event puts teeth behind the message that Morgan Stanley intended to send about the business barriers and legal costs that firms will face if they hire away brokers, a message that reverberates even more strongly now that the firm and UBS Wealth Management have withdrawn from the Protocol for Broker Recruiting, said a person close to the big broker-dealer.
The Bank Leumi case involved Doron Rachman, a 17-year brokerage veteran who resigned from Morgan Stanley on November 14 after almost six years at the firm’s Aventura, Florida, branch. After the U.S. broker-dealer unit of the Israeli bank agreed to the stipulated injunction on client contacts on the morning of November 20, it terminated his employment that afternoon, according to a declaration filed with the 11th Judicial Circuit Court in Miami-Dade County by Michael Taaffe, an outside lawyer representing Morgan Stanley.
Rachman could not be reached for comment.
A spokesperson at Morgan Stanley said the firm does not comment on pending litigation and declined to say whether it would continue to pursue a permanent injunction and damages in a Financial Industry Regulatory Authority arbitration forum. In its initial November 20 court complaint, Morgan Stanley sought not only the restraining order against Rachman, and Leumi “on his behalf,” but also “equitable relief and damages” in excess of $750,000.
A spokesman at Bank Leumi did not return calls for comment nor did Leonard Weintraub, a New York-based lawyer who represented the bank. Taaffe also did not respond to a request for comment.
The lawyer’s affidavit was attached to a stipulated injunction Rachman signed that prohibits him from contacting clients until Nov. 14, 2018, from using any original, copied, computerized or handwritten information on them and obligated him to return or purge any of the data within 24 hours. Morgan Stanley alleged that the broker printed out a 14-page list of names, cellphone numbers and e-mail addresses of clients five calendar days before he “abruptly” resigned and sent another list of 200 clients and prospects to his personal e-mail a day before leaving.
Although Bank Leumi is not a signatory to the Protocol, which permits brokers to jump among signatory firms with rudimentary client contact information, Morgan Stanley’s pursuit of Rachman was intended to show that it will play hardball against rivals and departing brokers at a time when it and other large firms have cut their recruiting budgets, according to industry lawyers, headhunters and executives.
In approving the restraining order, Circuit Court Judge William Thomas noted that the court was not making “any findings of fact or determination as to liability.”
Rachman registered as a broker with Leumi Investment Services on November 17, according to his BrokerCheck record. Over his 17-year career, which began at Prudential Securities, he has worked at eight firms.