Morgan Stanley Team in Ohio Jumps to Wells Fargo
Although the threat of litigation from Morgan Stanley following its exit from the Protocol for Broker Recruiting appears to have dramatically shuttered movement out of the firm, a handful of brokers have left without being taken to court and arbitration, according to recruiters and managers at rival firms.
In one previously unreported ‘clean’ break, the team of Leo Lauterbach and Jeff T. Gensheimer in Miamisburg, Ohio, moved to the private client group of Wells Fargo Advisors along with an associate on February 20, according to their BrokerCheck reports. They had been with Morgan Stanley since 2008 after working at UBS Financial Services.
A Morgan Stanley spokeswoman declined to comment beyond confirming the departure.
Lauterbach is listed as a first vice president on his former team page, an indication that he at one point generated $825,000 to $1.1 million in production, according to Morgan Stanley’s 2017 compensation plan. He has 24 years of experience and started his career at Prudential Securities and successor firm Wachovia Securities in 1993, before moving to UBS in 2003.
Gensheimer, who was a vice president, according to his former webpage, started in the industry in 1999 at Greenwich Capital Markets and moved to UBS two years later, according to BrokerCheck. Neither broker returned calls for comment on their move.
Their departures without apparent incident belie the consternation that has greeted reports of Morgan Stanley’s victories in restraining departing brokers from contacting former clients since its November withdrawal from the Protocol. It succeeded in at least four cases.
Other brokers who have left without incident include Marty Perez, a Miami, Fla.-based broker who joined Northern Trust on December 14. A 30-year industry veteran, Perez started his career at UBS Financial Services and had been with Morgan Stanley since 2007, according to BrokerCheck. He did not return a request for comment.
Joseph Eric Swaro Jr., in Dublin, Ohio left Morgan Stanley to join Wells Fargo’s private client group on December 15, 2017. The 21-year industry veteran, who was with Morgan Stanley for eight years, produced around $725,000 last year, according to a source familiar with his book.
Matt Borden, a lawyer at BraunHagey & Borden in San Francisco, said the moves show that brokers must adhere to the letter of their employment contracts—and perhaps even taking family photos from their desks when they leave—if they want to a smooth landing.
“If there’s video of you walking out with a box, it doesn’t matter what’s in the box,” Borden said. “These are the pitfalls that lawyers can endlessly exploit.”
Morgan Stanley had accused a Michigan team of taking client information after video surveillance showed them walking out with duffel bags. The team responded that the bags were actually filled with personal items, including a blood sugar monitor, soup cans, snacks and space heaters. Morgan Stanley last week withdrew its request for a restraining order against the eight-person team.
Another advisor who successfully left Morgan Stanley in December, said his lawyer helped him avoid the temptation to even write down client names and numbers beforehand. He said he was able to contact 90% of his clients by committing their names to memory and looking them up through online databases.
“There was nothing magic about it, but they told me not to take any information, any printouts, any electronic information, not to transfer any data,” he said about the hiring firm’s lawyers. “They were very conservative.”
The broker spoke on condition of anonymity.
Another former Morgan Stanley broker in the Northeast who joined a regional firm and who also spoke on condition of anonymity said he is informing former clients of his move but not actively soliciting them to transfer their accounts. He has also avoided mass-mailings.
“It’s door-to-door combat reaching out to my clients, one by one,” he said.
Irene Khane, left Morgan Stanley in December for JPMorgan without triggering a lawsuit. And in Los Angeles, Andrew Hutcheson left UBS after it left the Protocol to join Raymond James’ Alex. Brown unit without getting sued.
In Greenwich, Conn., John Slattery, a former managing director whose titled indicated he had generated at least $8.8 million in production over three years, left Morgan Stanley in January for J.P. Morgan Securities and has not been sued, according to a lawyer familiar with his case.