THE TERRIBLE TRO: Morgan Stanley Wins TRO Stand-Off With Former Broker In Atlanta

Another week and another headline depicting attorneys running the show at Morgan Stanley. A judge granted a TRO (temporary restraining order) on behalf of Morgan Stanley to stop a departing broker from speaking to clients regarding a potential move away from the firm and into the arms of his newly selected place of work (in this case RBC). 

Via AdvisorHub: 

“The stipulated temporary restraining order issued on June 20 by U.S. District Judge Jean-Paul Boulee ordered broker Benjamin Joel to provide to Morgan Stanley’s lawyers any business records or information within 48 hours, but excluded records or information received from clients after he resigned. Such exclusions, as well as the one for customers who already signed transfer forms, are standard, lawyers said.”

“Morgan Stanley and Joel also agreed to waive a further court hearing at which he could have offered evidence to dispute his former firm’s contention that he took confidential customer-contact data with him in violation of his employment and joint-production contracts.”

A quick word about TRO’s in the first place. Get a great lawyer before leaving a non-protocol firm. They will be worth their weight in gold. And you better have spent years fostering rock-solid relationships (think small client load, but large assets). This sort of setup makes a TRO a waste of money for the firm your departing as your clients will follow you no matter what. 

And there are pretty simple ways around the ‘non-solicit’ language most often associated with TRO’s. Updating your cell number with clients a few weeks before a departure. A client event during the same time frame. Face to face conversations and expertly executed contact sharing info are layups. 

But if you don’t have rock-solid relationships, or if you happen to have a garden leave provision in the paperwork you signed with the firm, be very, very careful about a transition. Clients tend to have short attention spans and can be prone to watch the markets in your legally mandated absence. Garden leaves are manageable but risky. 

TRO’s, on the other hand, are just plain dumb and a legal (some would say bullying) tactic employed by the firm that you have good reason to leave in the first place. If a potential TRO is all you have to legally deal with as you transition, it’s manageable and a winnable action on your part. 

Be proactive, retain counsel, and remain in heavy communication with your clients. Oh, and a raging bull market sort of helps as well. 😉

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