UPDATE: Wells Sues Fired Broker, Son and Their New RIA
(Updates first two paragraphs to reflect judge’s denial of Wells Fargo’s TRO request.)
A federal court has denied Wells Fargo Advisors’ attempt to prevent a broker it fired from contacting former clients for his new registered investment adviser firm in Columbus, Ohio.
In an order dated October 25, the U.S. District Court for the Southern District of Ohio, Eastern Division, denied Well’s motion for a temporary restraining order, saying it “has not shown a strong likelihood of success on the merits of its claims.”
Wells filed its TRO request on October 24, a week after it discharged Robert D. Meyers for “selling away,” a phrase that usually indicates a broker’s attempt to escape compliance strictures by working with customers outside a firm. However, the broker-dealer’s lawsuit also indicates that the firing and the legal maneuver both centered on attempts to prevent his leaving the firm.
Meyers and his son Matthew had registered their new firm Meyers Wealth Management, LLC with the Ohio Secretary of State on July 28, 2017 while both were still employed at Wells Fargo, according to the lawsuit, which says the firm discovered the registration this week.
In its courtroom request for a restraining order prohibiting the Meyers and their new firm from contacting former customers, Wells also made the more traditional argument that they violated their employment agreements by taking information protected under privacy law in order to persuade clients to join their firm.
Wells also filed a parallel complaint with the Financial Industry Regulatory Authority against the Meyers and their firm seeking a permanent injunction, according to the lawsuit.
The complaint is the latest in a resurgence of courtroom moves against breakaway brokers that comes amid a slowdown in recruiting of veteran advisors and the addition of more than 1,000 small advisory firms to the Protocol for Broker Recruiting in the past few years.
The Protocol, which allows brokers who move among signatory firms to take a limited quantity of customer contact information, was initially signed by big broker-dealers some 15 years ago to reduce litigation costs in courts and arbitration forums.
Neither Robert Meyers nor his son, who had worked with his father at Wells since December 2015, returned a call for comment left at their new firm.
On his BrokerCheck record, the elder Meyers and Wells engaged in a terse dialogue that offered little information about why he was fired after a decade at the firm.
“The firm alleges that Mr. Meyers was selling away,” Wells reported to the Financial Regulatory Authority.
“Mr. Meyers denies the allegations,” the 31-year industry veteran responded in his comment on the dismissal explanation.
Early in his career, Meyers was discharged from Shearson Lehman Brothers for allegations of removing proprietary information from his prior employer, Prudential-Bache Securities, according to the database. Meyers denied the allegations, and Shearson ended up paying him damages for wrongful termination and breach of contract, according to his BrokerCheck comments.
In its court filing, Wells Fargo Advisors said Meyers is not entitled to protection of the Protocol because his new firm did not become a member until October 18, a day after he resigned. It charged Matthew with violating the recruiting pact by taking account numbers of the team’s former clients and for failing to turn in his company-owned laptop immediately on his resignation.
The Protocol allows brokers to take just five pieces of information: client names, addresses, phone numbers, emails and account titles.
In 2011, Robert Meyers was named a “top advisor” in Ohio by Barron’s, which listed him as number 21 in the state with $511 million in assets. He started his career at Prudential-Bache Securities in 1985, according to BrokerCheck, which shows seven disclosures of customer complaints prior to 2005, as well as the two dismissals by Shearson Lehman and Wells. Two of the seven complaints were denied, four were settled and one that sought $40,000 for alleged fraud involving sale of an energy limited partnership in 1987 resulted in an award of just under $20,000.