Morgan Stanley has appealed to an Idaho court to prohibit three brokers from contacting former colleagues about joining them at a Stifel Nicolaus & Co. office that has been set up in the same city.
Morgan Stanley’s Coeur d’Alene branch manager, Michael Armon, and two associates, resigned from the lender on 9 May, causing "upset, anxiety, insecurity, uneasiness and concern" at "a relatively small office" that had only six advisers, according to a 17 May filing in US District Court for the District of Idaho by Morgan Stanley.
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The brokers who left oversaw approximately US$229 million of client assets and generated about US$1.7 million of revenue annually, the filing said.
Morgan Stanley has seeked the return of all company and client documents from the advisers and asked the court to ban them from destroying any records or documents that could be used in an arbitration proceeding that is being arranged, alongside prohibiting them from contacting any support staff still working at the Morgan Stanley office.
Reportedly, parties have begun negotiations to pick an arbitration panel to decide further issues.
The "Protocol for Broker Recruiting" – now been signed by more than 800 firms including Morgan Stanley and Stifel – allows brokers who give notice to take with them only the names, addresses, phone numbers, e-mail addresses and account type of clients in return for not being sued.
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By GlobalDataArmon, who has worked for more than 34 years at Morgan Stanley, and its Smith Barney predecessor, said in a filing that he did not violate the producing branch manager employment agreement he signed in 2008 with Smith Barney, which also, reportedly, prohibits him from soliciting employees within 100 miles of their new branch for 18 months.
Stifel has defended itself in more than six arbitrations in recent years involving alleged abuses in recruiting brokers from Wells Fargo Advisors.
