Merrill Lynch has filed a motion in federal court in an effort to proceed with arbitration in its claim against Dynasty Financial Partners, according to AdvisorHub.
The matter involves 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. They were assisted by financial partner Dynasty Financial Partners, and the team’s new custodian Charles Schwab & Co.
Merrill Lynch claims Dynasty “reneged on its agreement to arbitrate” in front of the Financial Industry Regulatory Authority’s forum. Merrill filed its motion in District Court for the Northern District in Georgia after a judge denied Merrill’s request for a temporary restraining order against OpenArc’s breakaway. Merrill alleged that Dynasty and Schwab supported a “premeditated corporate raid” to lure Atlanta-based OpenArc.
“The lack of candor, with Merrill and with this Court, is shocking,” Merrill wrote in its motion over Dynasty’s alleged reneging to arbitrate. According to the wirehouse, Dynasty agreed to arbitrate the claim under FINRA’s jurisdiction but “quietly took a position, incompatible with the record, that it never consented to FINRA arbitration.”.
Merrill is now asking the federal judge overseeing the case to allow the dispute to proceed in court or to enforce the agreement to arbitrate. “Merrill now finds itself at a procedural impasse,” the wirehouse wrote in the motion. “Dynasty is trying to avoid accountability for its misconduct, and it should not be permitted to use its self-manufactured limbo as a shield to prevent Merrill from pursuing its claims.”
A Dynasty spokesperson called Merrill’s motion a mischaracterization but did not provide additional explanation.
“Dynasty strenuously disagrees with Merrill’s continuing mischaracterizations at every point in this matter and we are preparing our response to this most recent attack,” the spokesperson wrote.
The judge previously denied a request from Merrill seeking a conference to consider a proposal to compel Dynasty to arbitrate. The court wrote on February 6 that Merrill had to make its request through a “formal motion and briefing.”
Merrill Lynch filed a lawsuit accusing OpenArc, Dynasty, and Schwab of running a “premeditated corporate raid” to lure advisors from the wirehouse to form a $129 billion RIA, contending that “strong-arm tactics” were used. “Upon information and belief, the individual defendants and the corporate defendants have been collaborating to divert the GCIAS business from Merrill and open a Dynasty and Schwab-affiliated registered investment advisor,” the lawsuit said.
The firm sought an injunction barring the defendants from, among other actions, soliciting or contacting Merrill clients or prospects they came to know while at the firm or encouraging Merrill employees to leave. Merrill said it could suffer “irreparable harm” without intervention from the court.
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