A dispute between TD Bank and one of its former advisors who left to work for Raymond James will be decided by a Financial Industry Regulatory Authority arbitration panel, ThinkAdvisor reports.
In a court complaint filed last month, TD Bank alleged that Adam Bracy, who spent over 10 years with the firm before resigning in February, breached his obligations under his contract not to solicit his former clients. The company said that about 30 clients, with $48 million in assets, moved from TD Bank to Raymond James soon after Bracy’s departure.
Last month, the two sides agreed to terms of a preliminary injunction issued by he U.S. District Court for the District of New Jersey. It will remain in effect until Feb. 21 or until a FINRA arbitration panel enters a materially identical injunction, whichever is earlier.
In its complaint, TD Bank said it learned Bracy disparaged TD to its clients and solicited the business of TD’s clients in violation of his contractual obligations not to interfere with its business relationships and not to solicit its clients.”.
TD adds that, “Raymond James has encouraged, assisted, and supported Bracy’s wrongful solicitations as part of its pattern and practice of hiring employees from competing institutions and bearing the risk of litigation and damages in the belief the long-term financial benefit of wrongfully diverting clients outweighs the cost.” .
TD also alleges that Bracy disparaged the bank’s reputation and claimed that Raymond James’ had higher quality offerings.
Raymond James and Bracy, a vice president of investments with the firm, deny wrongdoing in the matter, and in turn, accuse TD of trying to enforce “unconscionably broad restrictive covenants,” and describe the misconduct claims as frivolous.
Under the terms of the preliminary injunction, Bracy is barred from soliciting or initiating contact with TD clients with whom he worked or was otherwise associated with while at TD. He is also prohibited from making disparaging remarks about TD to such clients, and communicating with them about TD’s “leadership, capabilities, and operations,” or about TD’s fees and offerings unless a client first raises the matter.
Bracy is also banned from using, disclosing or transmitting TD material or confidential information related to the bank’s employees or clients. He is required to return to TD documents related to its clients, employees and business that he may have kept after leaving the bank. Bracy and Raymond James do not admit to any liability or wrongdoing in the agreement.
In their response to the complaint, Bracy and Raymond James state, “What TD seeks is a gross violation of FINRA Rules, New Jersey law, and public policies in favor of clients having the choice of their financial advisors; and against the stifling of competition.”.
“Individuals are justifiably concerned about the status of their investments going forward, and they need to rely upon their financial advisors to guide them through these highly turbulent and unpredictable times,” Raymond James and Bracy said, noting the recent stock market selloff.
“This is not the time to prohibit individuals from receiving straight answers to their investment-related questions from the advisor with whom they have long established relationships, and it is not the time to prevent clients from following their advisor to their new place of employment,” the response states.
Transitioning employment in the financial services industry requires counsel that can evaluate any potential legal implications so you can properly manage risk and focus on transitioning your clients. If ignored, these risks can turn a simple transition into contested litigation with significant consequences. Obtaining counsel from a qualified attorney should thus be part of any transition. Lewitas Hyman offers comprehensive and sophisticated counsel to clients nationwide, originating from years of advising financial firms and registered representatives on firm transitions. For more information, contact Lewitas Hyman at (888) 655 6002 or through our online contact form for a free consultation.
