Morgan Stanley Sues to Muffle Another Departing Broker
For the third time in a month, Morgan Stanley has asked a judge to issue a temporary restraining order prohibiting a broker who left for a smaller firm from soliciting former clients, while it seeks a decision against him in arbitration.
In the latest instance, the firm brought the claim and a request for “injunctive relief” on Tuesday against Steven P. Glazer, who had worked for six years at Morgan Stanley’s Deerfield, Illinois, branch. Glazer resigned on Friday, Dec. 15, to join Asset Management Group, a registered investment advisory firm that manages $353 million of client assets.
Morgan Stanley on November 3 dropped out of the Protocol for Broker Recruiting that allows brokers who move between its signatories to take some client contact information without fear of being sued on November 3, saying the pact was being gamed to allow other firms to gain talent. But neither Glazer, who said he was managing a little over $50 million of customer assets at Morgan Stanley, nor the other relatively inexperienced brokers Morgan Stanley has sued in the past month went to Protocol member firms.
“They want to attack the minnow so the whales pay attention,” said Glenn Movish, the founder of Asset Management Group, which is based in Northbrook, Il.
In its complaint filed in U.S. District Court for the northern district of Illinois’ eastern division, Morgan Stanley Smith Barney said the employment agreement Glazer signed in 2011 prohibited him from using client contact information if he left and from soliciting them for a year following termination of his employment.
It accused him of e-mailing on the day he resigned to his personal gmail address data on 100 customer accounts that a former assistant had compiled under the title “last review sheet,” and of sending information on a particular client to himself two days earlier at 10:09 pm, “hours after the office had closed for the day.”
Reached by phone at his new office, Glazer, a former floor trader at the Chicago Board Options Exchange, said he regretted sending himself the e-mail and is ready to return any information. But he denied another allegation from Morgan Stanley that he “secretly confiscated original client files on dozens of Morgan Stanley clients.”
UBS Financial Services earlier this month followed Morgan Stanley out of the Protocol, prompting lawyers, headhunters and brokers to closely follow how aggressive the firms might be in pursuing breakaway brokers.
The three cases prosecuted by Morgan Stanley to date—the first two of which succeeded— show the firm’s intent but do not necessarily indicate how successful it will be in the future because of the weakness of the cases, lawyers and recruiters said on Tuesday.
In each case, the brokers appear to have made mistakes in taking certain prohibited data and also went to non-Protocol firms, robbing them of arguing that they built their “books” on their own under Protocol protection.
“I don’t think this is your best test case because the allegation includes taking account numbers, which couldn’t have been taken even under the Protocol,” said George Miller, a lawyer at Shustak Reynolds & Partners, P.C. in San Diego. “But it’s probably indicative of the renewed appetite for these TROs.”
In its complaint against Glazer , Morgan Stanley sued under four counts, citing breach of contract, conversion and misappropriation of trade secrets, breach of the duty of loyalty and unfair competition.
A Morgan Stanley spokeswoman declined to comment.
Glazer, the sole member of his six-advisor team to leave, said he was frustrated by Morgan Stanley’s deferred compensation policy. “They were taking too much of my money,” he said, noting that as a second-career professional it is unlikely he would ever have worked long enough to get it all back.