Merrill Lynch has gone back to court in its legal battle with Dynasty Financial Partners involving a raiding dispute, according to AdvisorHub.
The case involves allegations by Merrill that Dynasty and Charles Schwab & Co. supported a “premeditated corporate raid” to lure a team of former advisors who left Merrill’s Global Corporate & Institutional Advisory Services team and broke away to form an RIA called OpenArc Corporate Advisors. Merrill also claims that Dynasty reneged on an agreement to arbitrate the matter in a Financial Industry Regulatory Authority forum. Merrill has been attempting to either force Dynasty to arbitrate or lift a stay in the case so litigation against the RIA backer and service provider can proceed.
Dynasty responded with its own legal action, denying the accusation that it reneged on the agreement because it asserts it never consented to arbitration in the first place.
In a brief filed recently in federal court in Atlanta, Merrill again asked the judge to either lift or partially lift a stay for its case against Dynasty, or alternatively to compel Dynasty to participate in a pending FINRA arbitration.
Merrill said Dynasty’s filing in opposition represented “vituperative and highly personal attacks disguised as arguments [that] cannot withstand scrutiny.” Dynasty has shown a “lack of transparency and candor” that has allowed the dispute over forum selection and discovery to drag on, the brief said.
“Dynasty continues to obfuscate, presenting the decision whether to maintain or lift the stay as a binary choice. It is not,” Merrill’s lawyers wrote. “The Court may use its broad discretion to fashion a practical, flexible solution that promotes efficiency, avoids duplication, and preserves the parties’ rights.”
In their brief, the lawyers included a flow chart presenting multiple options for the court, including lifting its stay on all claims, lifting some claims, only allowing discovery, or maintaining the stay as Dynasty seeks.
Dynasty alleges that Merrill’s motion to enforce arbitration was made in bad faith and that the firm had misstated facts about the judge’s arbitration order in an email to the court. The brief contends that Merrill Lynch’s request is disingenuous because it recognized that the judge granted a motion that only OpenArc and its individual defendants had filed agreeing to arbitrate.
Dynasty accuses Merrill of taking statements from the hearing out of context to argue that the firm implicitly agreed to FINRA jurisdiction. Arbitration agreements must be in writing under federal law and cannot be created through silence or implication, the firm argued.
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