Morgan Stanley Sues Manager, Broker Who Left for Merrill
Morgan Stanley Wealth Management is making a full-court press against a former New Jersey branch manager who joined Merrill Lynch in August and a broker who followed him to the new firm two weeks ago after his former boss’s allegedly improper solicitation.
In two separate lawsuits filed in federal courts in Pennsylvania and New Jersey on Thursday, Morgan Stanley sought orders temporarily restraining the manager, Robert Beylickjian, from recruiting additional Morgan Stanley employees from his former branch and the broker, Joseph Nelligan, from contacting clients he had inherited from a former broker in the branch.
Morgan Stanley concurrently filed complaints with Finra seeking expedited hearings and permanent injunctions once the courts rule on the restraining order requests.
The broker and manager worked together at Morgan Stanley’s Lawrenceville branch and are now with Merrill’s Princeton office. Nelligan, who had been with Morgan Stanley for 11 of his 19 years as a broker, declined to comment. Beylickjian, a 28-year industry veteran who had been with Morgan Stanley for nine years, did not respond to a request for comment.
Morgan Stanley claims Beylickjian, who joined Merrill in August as an associate complex director, hired Nelligan as well as brokers James Bumstead and Michael Barna in violation of his employment and separation agreements. The firm has not to date filed suits against Bumstead and Barna, who joined the same week.
“We continue to monitor the conduct of the other advisors who joined Nelligan at Merrill Lynch,” a Morgan Stanley spokeswoman said in an email.
The three brokers collectively managed $200 million in client assets, according to the filing against Beylickjian in federal court in the district of New Jersey.
The legal actions illustrate big firms’ continued willingness to pursue former advisors and managers at all levels of production, in spite of subscribing to the Protocol for Broker Recruiting that permits limited portability of customer contact information. The actions are likely meant to send messages to other advisors and managers at a time when the firms have retreated from expensive recruiting programs.
“They are the equivalent of taking off their head and putting it on a spike at the city gates,” said Marc Dobin, a securities lawyer in Jupiter, Florida.
Beylickjian did not return a request for comment. According to an exhibit attached to the firm’s lawsuit, he received some $78,000 pretax in severance, bonus and health benefits as part of his separation package and an inherited-account agreement that prohibited him from soliciting former employees and the inherited accounts for one year.
“Morgan Stanley expects all departing employees to adhere to their contractual and trade secret obligations,” a firm spokeswoman wrote in an e-mail, noting that Nelligan on Friday agreed to stop calling clients from accounts that he had inherited. “We are pleased with the result of the injunction proceedings in this matter. Since the litigation is still ongoing, Morgan Stanley has no further comment at this time.”
A lawyer for Merrill Lynch said it and Beylickjian are aware of his non-solicitation obligations and in compliance.
“With regard to the former agreement and Morgan Stanley’s request for information regarding communications between Mr. Beylickjian and the three Morgan Stanley financial advisors in violation of [the inherited-account] agreement, this will confirm that no such information exists because Mr. Beylickjian did not solicit, either directly or indirectly, Messrs. Barna, Bumstead or Nelligan to join Merrill Lynch,” Kathleen Laubenstein of the law firm Rubin Fortunato wrote in an exhibit attached to the Morgan Stanley suit against Beylickjian.
Morgan Stanley in July prevailed in getting a court order prohibiting a producing manager in Mystic, Conn. from contacting former clients governed by inherited account agreements.
A spokesman for Merrill Lynch said he could not immediately comment.