NEW YORK (Reuters) - Morgan Stanley (MS.N) has sued six brokers who left an Illinois branch of the firm last week to join competitor Stifel Nicolaus (SF.N), alleging that they have been soliciting Morgan Stanley clients in violation of employment agreements.
Filed on Wednesday in Chicago federal court, the lawsuit said the team managed about $660 million in assets at Morgan Stanley’s Bourbonnais office before their sudden resignations on Sept. 13. The brokers apparently took client files and contact information with them and have been asking clients to move to Stifel, the lawsuit alleged.
“When departing advisors breach their agreements, remove confidential information or trade secrets, including personal client information, or engage in other misconduct, they should expect that Morgan Stanley will take appropriate legal action,” spokeswoman Christine Jockle said in a statement.
The departures include the former manager of Morgan Stanley’s Bourbonnais office, Zachary Birkey, now branch manager of Stifel’s Bourbonnais office. Birkey declined to comment on the lawsuit.
Neil Shapiro, a spokesman for Stifel, said the company does not comment on pending litigation.
Morgan Stanley’s lawsuit said the brokers each signed an agreement not to solicit the company’s clients for one year after leaving the firm for any reason. It asked the court to order the brokers to stop soliciting clients or using any of Morgan Stanley’s information.
The complaint said the brokers also may be making false statements about their former employer. Some clients have been asking Morgan Stanley if its Bourbonnais office is closing or if Morgan Stanley is going bankrupt, the complaint said.
Files for one large client also appear to be missing, the complaint said.
Lawsuits over broker defections had dropped after major Wall Street firms signed a pact in 2004 agreeing not to sue if brokers left for rival firms and took clients with them. Morgan Stanley left the so-called Protocol for Broker Recruiting last October, saying the move would allow it to invest more in its advisers.
Reporting By Dena Aubin, Editing by Alexia Garamfalvi and Susan Thomas