Morgan Stanley Obtains TRO Against Breakaway Long Island Advisor
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.