Schwab Seeks to Restrain Another Former Broker
Charles Schwab & Co. asked a federal court on Thursday to prevent a broker who worked for the firm for over a decade in Wisconsin from contacting customers about joining him at BMO Harris Financial Advisors, Inc.
Saeger, who worked at Schwab for 12 of his 16 years as a registered representative, resigned in October 2018 after giving one month’s notice, according to the lawsuit. Schwab sued after hearing from two customers who said Saeger reached out to them through email and LinkedIn messages, it said.
Reached by phone, Saeger declined to comment and appeared surprised to hear about the filing.
Filed in U.S. District Court for the Eastern District of Wisconsin, the suit is the latest in a series that Schwab, Fidelity Investments and even registered investment advisory firms such as Mercer Advisors have been filing against former advisors who allegedly use proprietary data to restart their practices. Schwab last month filed for an injunction and FINRA arbitration award against Alfredo J. Martinez, who set up a hybrid RIA practice in New Orleans after working for a decade at the firm.
Saeger worked with customers seeking higher levels of service than the self-directed investors that Schwab typically services, according to the new lawsuit. Such brokers get most of their referrals from the self-directed channel, in contrast to brokers who build their books through cold-calling and personal contacts, it said.
“Schwab considers the protection of customer information and confidentiality to be of utmost importance, and expects that its representatives will comply with their contractual and legal obligations concerning customer information,” said Peter Greenley, managing director of corporate reputation at Schwab. “If it becomes necessary, Schwab will not hesitate to enforce those obligations in a court or arbitration proceeding.”
Schwab is not a member of the Protocol for Broker Recruiting, which allows brokers to take limited client contact information with them when moving to other signatory firms, without fear of drawing lawsuits. Wirehouses such as Merrill Lynch routinely filed for injunctions and restraining orders against departing brokers prior to establishment of the Protocol in 2004.
UBS and Morgan Stanley withdrew from the pact in 2017, and Morgan Stanley has been selectively suing against brokers it accuses of using firm-owned data to contact clients.
In the Schwab promotional video, Saeger touted the wide investment resource he was able to offer investors.
“The beautiful things about working with Schwab is that we have so many different investment choices and my whole goal is to make the right choice,” Saeger said in the video.