Morgan Stanley and Jones Brokers Who Joined Wells Agree to TROs
(Updated with comment from Edward Jones in eighth paragraph.)
A pair of Morgan Stanley brokers who moved to Wells Fargo Advisors in Florida two weeks ago and a solo practitioner from Edward Jones who joined Wells in Minnesota three weeks ago have agreed to temporarily stop soliciting former customers, according to judicial orders on Wednesday and Thursday.
Morgan Stanley last Friday asked Judge Edwin G. Torres in the southern district of Florida to immediately enjoin Gary R. Burwick and his junior partner Marc Engelman from calling clients and to order them to return to Morgan Stanley’s lawyer any records or information pertaining to their former employer’s clients or business.
In an apparent victory for Morgan Stanley, they agreed to a stipulated agreement accepting an injunction and canceling a scheduled evidentiary hearing. The agreement is in effect until the firm’s parallel Finra arbitration claim against the brokers is resolved, their one-year non-solicitation term expires next September or the parties reach a further agreement, according to Judge Torres’ order.
“This injunction order by consent is not a decision on the ultimate merits of this dispute,” he wrote, “and no party hereto shall argue that this injunction order precludes the making of any substantive argument at any hearing before Finra.”
Morgan Stanley accused the brokers, who were allegedly managing some $500 million in client assets, of taking unspecified information from their office in Plantation, Florida, to a Wells private client group branch in Boca Raton.
In a similar case, U.S. District Court Judge John R. Tunheim in the district of Minnesota on Thursday approved a stipulated restraining order affecting James Sirek, a broker who left Edward Jones on Sept. 10 for Wells. Edward Jones filed its request for a preliminary injunction and temporary restraining order on Sept. 30. The stipulated agreement it reached with the broker prevents him from calling former clients and requires him to return information and documents related to his former employer and clients.
Jones accused Sirek, who was allegedly managing more than $57 million in client assets in a Farmington, Minnesota, office, of taking “trade secrets” to his new Wells office in Minnetonka, according to the original complaint.
“Today’s order validates the non-solicitation provisions of the Edward Jones employment contract as well as the measures Edward Jones takes to protect the confidentiality of client information,” said a spokeswoman at the St. Louis-based firm.
Sirek worked at seven firms over his eight-year career, including five at Edward Jones, according to his BrokerCheck history.
Jones’ pursuit of him follows other litigation moves it has made against both larger and smaller producers, illustrating a continuing strategy by firms that are not in the Protocol for Broker Recruiting to inhibit broker movement. TROs were commonly used by wirehouses before the Protocol was created in 2005, but Jones and discount brokers such as Charles Schwab and Fidelity Brokerage Services have recently wielded the courtroom cudgel.
Martin Chester, a lawyer representing Sirek, declined to comment, and John Radmer, who represents Edward Jones, did not respond to a request for comment.
Craig D. Stein, a West Palm Beach, Florida, lawyer who represents Burwick and Engelman in the Morgan Stanley case, declined to comment on their agreement to the stipulated injunction.
A Morgan Stanley spokeswoman declined to comment, and spokespeople at Wells Fargo did not respond to requests for comment.
Morgan Stanley has filed more than a dozen requests for temporary restraining orders since leaving the Protocol for Broker Recruiting almost two years ago. In mid-September, a Long Island team that managed around $1 billion in client assets agreed to a TRO, but in August, a judge dissolved a TRO against an Oregon team who left for UBS Wealth Management USA.