Fidelity Sues Atlanta Broker Who Joined Merrill Lynch

Fidelity Brokerage Services has filed a lawsuit against Merrill Lynch and an Atlanta-area broker who joined the wirehouse in mid-June, asserting that he was soliciting former customers to follow him in violation of his employment contracts.

Ryan Dolar, who oversaw $356 million in client assets for approximately 449 client households, “aggressively and blatantly” misappropriated and misused Fidelity’s confidential and trade secret customer information, according to the complaint filed Thursday in U.S. District Court for the Northern District of Georgia, Atlanta Division.

The suit, which asks the court to issue a temporary restraining order and injunction against Dolar’s solicitations, revives a litigation strategy that discount brokers such as Fidelity and Charles Schwab had been actively pursuing prior to the coronavirus lockdown crisis. They claim that their advisors were dependent on the firms’ reputations and referrals from call centers for building their books, unlike advisors at full-service firms who cold-called.

Most full-service firms have curtailed such litigation, partly because of the Protocol for Broker Recruiting that permits some customer-data portability when advisors move among signatory firms. Fidelity and Schwab are not Protocol members.

Dolar, who joined Fidelity in 2015 and affiliated with its “personal and workplace” unit two years ago, declined to comment. He is a certified financial planner who began his brokerage career in 2009 with NYLife Securities and also had worked at Wells Fargo Advisors as a private banker, according to his BrokerCheck history and LinkedIn profile.

A Merrill spokesman declined to comment.

Fidelity, which said it also filed a Finra arbitration complaint seeking damages and a permanent injunction against the defendants, said Dolar’s employment contract subjected him to a one-year ban on “directly or indirectly” soliciting clients. At least five Fidelity customers told the firm that they were contacted by him, according to the complaint, and one said he promised her lower fees at Merrill and asserted she would be serviced by a “new hire” if she remained with Fidelity.

The lawsuit asks the court to require Dolar to return all customer records, even if Dolar replicated contact and account data from memory.

“Fidelity takes the protection of our customer information seriously,” said a company spokesman in an e-mailed statement. “When necessary, Fidelity takes legal action in court and through Finra arbitration to further protect customer information.”

Some lawyers said Fidelity is taking a risk in seeking in taking legal action during a pandemic in which courts might give an edge to client choice.

“Based upon the fact that people are working from home, based upon the fact that there’s a lot of confusion right now with the economy, the courts need to look real close and decide if they are going to grant an injunction,” said Tom Lewis, a securities employment lawyer at New Jersey-based Stevens & Lee who represents brokers and firms.