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September 13, 2019

Morgan Stanley Obtains TRO Against Breakaway Long Island Advisor

by Mason Braswell
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Enforcement, News
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Morgan Stanley
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Comments (6)
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Morgan-Stanley-Obtains-Tro-Against-Breakaway-Long-Island-Advisor
Prasit photo/MOMENT/GETTY IMAGES

Morgan Stanley and a Long Island, NY, advisor who started a registered investment advisory firm two weeks ago reached an agreement that prevents him from contacting some of his former clients.

The stipulated temporary restraining order, in effect until resolution of an arbitration claim filed by Morgan Stanley seeking a permanent injunction and damages, limits the ability of Robert J. Conzo to urge former customers to transfer assets to The Wealth Alliance, the Melville-based RIA he established with several colleagues.

In its August 28th request for a TRO and injunctions, Morgan Stanley cited an affidavit from the Conzo team’s former business development director. It said the broker and a client service associate took client profiles with them and solicited some prior to their August 23 resignation from the firm.

Conzo and three other advisors who moved with him from Morgan Stanley had been overseeing about $1 billion of assets, according to a lawyer for the team, Corey Kupfer at Kupfer & Associates in New York. Only Conzo and client associate Nancy Lee Giusto were named as defendants.

The TRO, issued by a lower-court New York State judge two weeks ago and extended on September 4 through the stipulation, requires return of confidential client information but is less restrictive than some others Morgan Stanley has obtained against former brokers, Kupfer said.

It allows Conzo to contact clients he introduced to Morgan Stanley after joining from UBS in 2008. Kupfer said that represents a “material” portion of the advisor’s book.

As is typical, the TRO also permits Conzo and his colleagues to take unsolicited in-bound calls from former clients. “The TRO just affirms the legal obligations as we knew them,” said Kupfer.

Morgan Stanley’s previously unreported filing underscores the wirehouse’s aggressive stand against breakaway brokers who it accuses of violating solicitation clauses in employment contracts. But it suggests that in some cases brokers can negotiate leeway as they attempt to jump-start their practices pending arbitration proceedings.

A spokeswoman for Morgan Stanley declined to comment on the filing or the company’s legal strategy regarding breakaways brokers following the firm’s November 2017 exit from the Protocol for Broker Recruiting.

To be sure, court orders and stipulations reached to date are influenced by case-specific facts. Filings in the Conzo case suggest some internal battles among Conzo and some members of his team. He breached a joint production agreements with at least one member, Robert Digregorio, who remains at Morgan Stanley. Digregorio and John A. Defrancisco are now listed as heads of The Cypress Group, the name of Conzo’s former team, on its Morgan Stanley website.

Conzo, who lists himself as chief executive of the RIA, declined to comment on the legal action.

Joining him at The Wealth Alliance are advisors, Eric A. Diton, Paul C. Camhi, Peter Silber—who were on another team at Morgan Stanley—and four client associates. The RIA uses Fidelity Investments as its custodian firm, according to its website.

Diton, who ranked as a Forbes 2019 Best-in-New York Wealth Advisor, with $648 million of team assets, is based in Boca Raton, Fla., and is president of the RIA. He did not return a call for comment.

Since exiting the Protocol, Morgan Stanley has sued and brought arbitration claims against more than a dozen advisors.

In June a federal judge approved a stipulated restraining order reached with an Atlanta broker, but another federal jurist in Oregon reversed a TRO she had previously issued against a broker in the state who joined UBS. In addition to citing alleged solicitation violations, Morgan Stanley alleged that the Oregon broker violated  provisions of an account inheritance plan known as the “Former Advisor Program.”

Several employment lawyers who work with brokers say the wirehouse’s aggressive strategy is aimed as much at dissuading current advisers from leaving as it is in keeping those who have left from soliciting former clients.

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Comments (6)
  • on Sep 13 2019, Ron Edde Director of Recruiting and Mergers says:

    While the temptation to save money is always strong, advisors (especially those from non-protocol firms)
    should be prepared to retain good legal representation well in advance of a move. While that is going to involve a few thousand dollars, being ready for a fight that may or may not come is much less expensive than having the ability to conduct one’s business delayed for weeks while an attorney has to thoroughly review relevant documents and prepare briefs in order to fight a TRO and/or injunction.

    > Reply to Ron Edde Director of Recruiting and Mergers
  • on Sep 13 2019, Adios says:

    Another slow day on the Advisor Hub boards–only Ron E. posting (as usual). The days seem to be getting a lot slower. The readership has bailed due to the constant and random deleting of posts. That’s the only reasons people come to this site anyway. Advisor Hub–you’re in the entertainment business and should cater to your audience.

    > Reply to Adios
  • on Sep 13 2019, Roscoe says:

    MS has to go after exiting FA’s otherwise there wouldn’t be anyone working there. Management is clueless and bullies employees. FA headcount keeps dropping. No infrastructure, no product experts, no decision makers. James Gorman has ruined MS.

    > Reply to Roscoe
  • on Sep 14 2019, sick of endron/adios says:

    deleting posts from idiots who think their every utterance is gold endron–maybe work on your business and not worry about rons

    > Reply to sick of endron/adios
  • on Sep 14 2019, Humor me says:

    Hey Ron, ditto back to you. Do you really think we don’t know that’s you? Ha! Really getting to you, eh?

    > Reply to Humor me
    • on Sep 14 2019, Ron says:

      It wasn’t me. But I tend to agree with his/her post.

      > Reply to Ron

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