Morgan Stanley Seeks TRO Against Team that Jumped to Stifel in Illinois
Morgan Stanley Wealth Management once again flexed its legal muscle on Wednesday seeking a temporary restraining order against a six-person team who jumped to Stifel Nicolaus & Co. last week in Bourbonnais, Illinois.
The complaint, filed in U.S. District Court in the Northern District of Illinois, alleges that the six brokers, who managed some $660 million in assets and produced $4.2 million in revenue, violated the terms of joint production agreements by taking contact information of their largest clients when they left on Friday, and by encouraging clients to follow them to their new firm.
“Based on Morgan Stanley’s conversations with its other clients in just this short span since defendants resigned, it is also clear that defendants have initiated numerous other telephone calls to, and/or have been personally meeting with, Morgan Stanley clients,” the firm said in the complaint.
The claim, which names each of the brokers and also asks for an order that they return any documents, reasserts and aggressive stance that Morgan Stanley had taken following its withdraw from the Protocol for Broker Recruiting in November. The firm appeared to have backed off from filings in recent months despite the exit of another large team over Labor Day weekend but may have been looking to send a message that it would still be vigilant about enforcing the terms of its contracts.
“This clearly gets people thinking at Morgan Stanley that if we leave, there’s a chance Morgan Stanley may come after us,” said Thomas B. Lewis, a lawyer with Stevens & Lee in New Jersey, who was not involved in the case. “It does have a deterrent effect.”
Morgan Stanley spokeswoman Susan Siering said in an emailed statement if brokers breach their employment agreements or take information, they “should expect” legal action.
“Morgan Stanley will take appropriate legal action to protect its rights and to protect the client’s interests in preventing the misuse of their personal information,” she said.
A spokesman for Stifel, which is not a named party on the complaint, declined to comment. Zachary Birkey, who managed the Bourbonnais office for Morgan Stanley and is also manager of the Stifel branch, did not immediately return a call for comment.
The specific allegations against Birkey as well as Ronald Ouwenga, Brian Thomas, Myron Hendrix, Michael Bruner, and Jeff Schimmelpfenig are similar to those made in the more than half-dozen cases Morgan Stanley filed against departing brokers in the few months after its exit from the Protocol. The firm obtained mixed results from the initial flurry of filings.
Morgan Stanley in this case said it believes that client information has been removed because it has not been able to locate “several file drawers” of documents, including information on a large, unidentified institutional client.
At least one client had informed Morgan Stanley they he or she received a call from a broker on the team notifying them of their move and asking them to transition their assets to Stifel, according to the complaint. It also cites a Facebook post regarding their change in employment that had been “liked” and commented on by Morgan Stanley clients.
Morgan Stanley also alleges that the brokers have been disparaging the firm by implying that it may be going bankrupt and that it is closing the Bourbonnais office.