Morgan Stanley Sues Oregon Broker who Left for UBS
Morgan Stanley has filed another request for a temporary restraining order against an early-career broker, this time seeking to handcuff an advisor who joined UBS from calling clients he inherited as part of a retirement-transition agreement with an older broker.In a lawsuit filed Tuesday in U.S. DIstrict Court in Oregon, Morgan Stanley asserted that David James Sayler pre-solicited his clients by mass-mailing thank you cards weeks before he resigned on June 13 to join UBS, and by following up with solicitations after his move.
Sayler, who first registered as a broker in 2006 at Morgan Stanley predecessor Smith Barney, did not return a request for comment.
Morgan Stanley’s filing seeking return of confidential client information and a temporary bar on active solicitation is the second it has made within two weeks. The wirehouse revived its attempts to keep fleeing brokers’ clients in-house through lawsuits after exiting the Protocol for Broker Recruiting in November 2017, one month before UBS similarly left the pact.
The Protocol permits advisors to take rudimentary client-contact information with them when joining other signatory firms.
A Morgan Stanley spokeswoman declined to comment, and a UBS spokesman did not immediately respond to a request for comment. UBS is not named as a defendant.
Morgan Stanley has stepped up its court filings in recent months to restrain fleeing brokers from jump-starting practices, while seeking longer-lasting constraints and damages in Finra arbitration.
The action against Sayler appears to be the first that focuses much of its argument on his alleged violation of a “Former Advisor Program” agreement he signed in 2017. The “sun-setting program” for retiring advisors allows them to collect a portion of the fees and commissions collected from their former clients from younger advisors who inherit the accounts.
Sayler was part of a five-advisor team known as the Cedar Ridge Group that signed FAP commission-splitting agreements with James Maddux, the advisor who retired in 2017, according to the lawsuit. The other advisors with the joint production agreements remain at Morgan Stanley, it said.
Sayler separated from the team in April 2019, according to the complaint.
“[H]e started soliciting clients even before he resigned, continued to do so upon his resignation, and continues to do so,” according to the filing for a preliminary injunction and TRO. It also says he printed out 170 pages of information, and cites attestations from some customers that he solicited their accounts.
In proposing to the judge terms of a TRO, Morgan Stanley said it would not prohibit Sayler from returning phone calls from clients who contact him or from processing account transfer requests, as is typical.
The firm asked the court to compel Sayler to return any confidential information he took within 24 hours and to have his mobile phone and other personal electronic devices imaged by a third-party vendor to preserve their contents as evidence.
The filing does not quantify the size of Sayler’s practice, or say how much it was supplemented by clients he inherited from Maddux.
The thank-you cards that Sayler allegedly sent clients before he resigned said, “I enjoy working with you and look forward to the years to come,” according to the filing.
The wirehouse would not have approved the language had it known that “those ‘years to come’ would be years spent working at another financial firm,” Morgan Stanley wrote in the complaint.