Newly Hired Stifel Brokers Ask Court to Delay Morgan Stanley’s TRO Suit
Six brokers who Morgan Stanley sued for allegedly violating their non-solicitation agreements asked a court on Thursday to delay consideration of the firm’s request for a temporary restraining order, indicating they will contest their former firm’s attempt to stop them from calling clients.
The brokers, who left one week ago for Stifel Financial’s Stifel Nicolaus, filed a motion in U.S. District Court in the Northern District of Illinois to “strike” Morgan Stanley’s request for a hearing on Friday morning. The rush to court was “premature,” they argued, asserting that Morgan Stanley was posturing over the harm that has been created in order to “create an emergency” for strategic litigation purposes.
“Plaintiff will not be harmed (and this Court will be better served), by allowing Defendants time to present an orderly response,” they wrote in their motion.
The filing has the dual purpose of giving their lawyers time to prepare a counter-argument and to give them more time in which to reach clients, said Thomas B. Lewis, a lawyer in New Jersey who has worked on TRO cases.
A spokeswoman for Morgan Stanley declined to comment, and a Stifel spokesman did not immediately return a request for comment.
Morgan Stanley filed its lawsuit on Wednesday along with a complaint to a Financial Industry Regulatory Authority arbitration panel seeking damages and a permanent injunction against the brokers. The lawsuit accused them of taking client information that is proprietary to the firm and of soliciting clients to move their assets in violation of the brokers’ employment contracts.
The brokers—Zachary Birkey, Ronald Ouwenga, Brian Thomas, Myron Hendrix, Michael Bruner, and Jeff Schimmelpfenig—oversaw $660 million in customer assets and generated $4.2 million in annual revenue, Morgan Stanley said in its filing.
The brokers sought to address Morgan Stanley’s concerns about taking “several file drawers” of customer information even before the lawsuit was filed, the brokers’ lawyers at Levenfield Pearlstein in Chicago, wrote in their response on Friday. The firm has been unresponsive to their attempts to resolve the issues, they wrote.
Morgan Stanley’s arguments that “numerous clients” told the firm that they were approached about moving their accounts to Stifel require the brokers to meet with six clients to help prepare affidavits in response, the brokers argued.
Morgan Stanley initiated a flurry of courthouse requests for restraining orders shortly after it withdrew last November from the Protocol for Broker Recruiting, but had eased its litigation stance until the complaint filed on Wednesday.
The firm’s complaint also alleges the brokers have made disparaging remarks about the firm by implying that their branch in Bourbonnais, IL, might be closed and by implying that Morgan Stanley could go bankrupt.