Morgan Stanley Pursues Florida Duo Who Jumped to Wells Fargo
Morgan Stanley Wealth Management has gone to court to block two brokers in Fort Lauderdale, Florida, from contacting their former clients as it continues to aggressively enforce its customer non-solicitation agreements.Morgan Stanley’s complaint, filed on Friday in U.S. District Court in the Southern District of Florida, alleges that Gary R. Burwick and his junior partner Marc Engelman, who managed some $500 million in client assets, took unspecified customer information from their former office in nearby Plantation, Florida, and have been soliciting their former clients following their departure to Wells on September 20.
Morgan Stanley is seeking a temporary restraining order, preliminary injunction as well as return of any client information the two allegedly removed and has filed a parallel claim for damages in arbitration, according to the complaint.
“These clients’ accounts generate hundreds of thousands of dollars in annual revenues, and have generated hundreds of thousands of dollars in profits for Morgan Stanley,” the firm said in the complaint.
Judge Edwin G. Torres on Friday scheduled a hearing on the petition for October 3 saying that he wanted to give the brokers “notice and opportunity to respond” to the claims, which he said justified “expedited” proceedings.
Burwick, a 21-year industry veteran who had been with Morgan Stanley since November 2009, declined to comment as did a Wells Fargo spokeswoman. He and Engelman, who spent all of his three-year career at Morgan Stanley, were said to have been generating $2.5 million in annual revenue.
The filings reflect Morgan Stanley’s ongoing willingness to go to court to enforce its non-solicitation agreements. The judge’s order does include a silver lining for brokers in that courts appear to be increasingly willing to give brokers a chance to respond rather than issuing a “knee-jerk” TRO on Morgan Stanley’s filings alone, according to James Heavey, a lawyer with New York-based Barton LLP who often represents brokers in employment cases.
“I’m seeing it more and more in these commercial disputes,” said Heavey, who was not involved in this case. “It shows that the judge is being mindful of both sides and attempting to be equitable.”
Such delays can be especially valuable to brokers at a time when they are rushing to transition assets, said Kevin T. Hoffman, a lawyer in Greenwich, Connecticut who also represents brokers in employment cases.
“Morgan Stanley wanted an immediate TRO, not the potential for a whole week to pass,” said Hoffman, who was not involved in this case.
A spokeswoman for Morgan Stanley reiterated a statement provided in other cases that it “will take appropriate legal action to enforce its rights and protect our clients’ information.”
Morgan Stanley has brought over a dozen TRO claims against departing brokers since it left the Protocol for Broker Recruiting almost two years ago in a bid to reduce hiring costs and focus on retention. In mid-September, a Long Island team who 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.
The claims are aimed as much at retaining clients as attempting to dissuade current brokers from leaving, lawyers have said. Burwick and Engelman’s departure came amid a number of exits in the past two years from Morgan Stanley’s South Florida branches, primarily to Wells Fargo Advisors and Raymond James Financial’s employee brokerage channel.
Morgan Stanley’s complaint cited affidavits from Burwick and Engelman’s former branch manager as well as two advisors at their former office who said clients told them that they were contacted by the duo about moving assets to Wells. An unspecified number of the accounts were inherited accounts governed by Former Advisor Employment Agreements or joint production agreements with other advisors that had 12-month non-solicitation provisions, the firm said.
The firm did not identify any documents taken by the brokers but said it believed they had removed data based on “the type of information” accessed and “the circumstances under which they accessed” it.
-Mason Braswell contributed to this story.