UBS Wealth Management USA won a victory in court in its bid for a temporary restraining order against three of the firm’s former advisors, AdvisorHub reports.
The dispute involves Jonathan M. Modiano, Adam M. Jones and Mark A. Steinberg, who departed UBS in Michigan last month to join RBC Wealth Management-U.S. in Birmingham. U.S. District Judge Susan K. DeClercq of the Southern District of Michigan barred the three from violating non-solicitation clauses in their employment agreements as well as the agreements they signed when they inherited accounts from retiring advisors.
DeClercq granted the order ex-parte, before Modian, Adams, and Jones had a chance to respond.
UBS went to court against the three, saying they had inherited the vast majority of the $1.2 billion in assets they managed from an advisor who retired. The complaint states that in exchange for taking over the accounts, the team agreed that they would not solicit those clients to leave the firm until the retiree had been fully paid out at the conclusion of a five-year term ending December 31, 2027. The firm also contends the three signed an agreement prohibiting them from soliciting clients other than those that they specifically introduced to the team.
But UBS alleges that immediately after the team departed, the wirehouse began receiving account transfer requests. Modiano, Jones and Steinberg were accused of trying to lure clients with offers of better interest rates on outstanding lines of credit. The complaint said they may have taken confidential client contact information.
“Defendants deliberately orchestrated a calculated scheme to unlawfully solicit UBS’s most lucrative clients, prioritizing those with the highest asset value in a blatant attempt to undermine UBS’s business interests in breach of their contractual and legal obligations to UBS,” UBS alleged.
In her order, DeClercq barred the defendants from “using, disclosing, or disseminating UBS’s confidential information”, and ordered them to provide UBS a list of all UBS clients with whom they initiated contact about the possibility of moving their business and/or accounts to RBC.
The brokers’ lawyer, Thomas B. Lewis at Stevens & Lee in New Jersey, said in a statement: “The advisors have done nothing wrong and have complied with their obligations. The advisors look forward to defending themselves and opposing UBS’ allegations.” An RBC spokesperson did not return a request for comment.
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