Judge Denies UBS Attempt to Handicap Ex-Broker’s New Firm
Former UBS Financial Services broker Phil G. Fiore has prevailed against his former employer’s attempt to restrain him and three other brokers at their new investment advisory firm from soliciting their former clients.
A federal district court judge in Connecticut ruled late Monday that UBS failed to prove that it would suffer “irreparable harm” if he did not grant its request for a temporary injunction against Fiore and other members of his firm, Procyon Private Wealth Partners.
Fiore led a UBS team that produced $6 million and oversaw around $8 billion in assets before he left last year, UBS said in its lawsuit.
The trio of brokers from his former team who joined Procyon in June violated some terms of their transition and teaming contracts but made “good-faith” efforts to comply with the Protocol for Broker Recruiting that supersedes those agreements, Judge Victor A. Bolden wrote in a 40-page decision.
The Protocol permits brokers who move from one signatory firm to another to take limited client contact information with them.
“[B]ecause the Protocol applies, UBS will not be able to show a likelihood of success on the merits,” the judge ruled.
UBS, which had filed its court complaint on June 16, also has a request for damages and a permanent injunction in motion against Fiore and brokers Jeffrey Farrar, Louis Gloria and Thomas Gahan through the much more extended process of Finra arbitration.
A spokeswoman for UBS did not return a request for comment on the status of the arbitration.
The firm argued In its court complaint that Farrar, Gloria and Gahan sent clients a blast email when they resigned from UBS on June 2 with details of how to transition their accounts to Procyon. The solicitation violated agreements signed when they joined the firm from Merrill Lynch in 2009, UBS said.
The brokers also misled clients by implying in marketing materials that their entire group had moved from UBS’s Stamford office to Fiore’s new firm in nearby Shelton.
UBS brokers Steve DesRochers and Dean Gaugler, former members of Fiore’s team, remain at the Stamford branch along with several associates, UBS said.
The judge agreed that the brokers’ email to more than 1,600 clients and “centers of influence” was questionable, as was some of their “behavior” during the transition. An unidentified member of Fiore’s team sorted a list of clients that he was leaving with the firm by zip code in order to confuse UBS brokers trying to contact them, according to an exhibit attached to UBS’s complaint. “It’s the small things,” the broker wrote in an email, which added a four-letter verb intensifier.
“Basically, the judge said some mistakes were made, but not enough to throw out the Protocol defense,” said Marc S. Dobin, a securities industry lawyer in Jupiter, Fla., who was not involved in the case but reviewed the decision.
Fiore, 49, was “discharged” last November while on heightened supervision for alleged failure to disclose outside activities to the firm. He agreed that he was not protected by the Protocol, according to the decision.
However, UBS would not be able to prove that his alleged violations would result in “irreparable harm” because specific monetary harm in terms of lost revenue per client can be calculated, the judge wrote.
Andrew J. Melnick, the lawyer representing Procyon and the brokers, did not return a call for comment.
Fiore referred requests to comment to Dynasty Financial Partners, which is providing platform support and transition funding to his firm.
“The Court’s sweeping decision is a welcome development and the principals of Procyon look forward to continuing to focus on the growth of Procyon Partners,” a spokeswoman said.