Morgan Stanley is accusing a recently departed advisor of placing a loyal ex-employee's retirement earnings at risk by soliciting former clients after joining Raymond James.
Morgan Stanley filed suit in federal court in Miami on Tuesday asking for a temporary restraining order preventing a former advisor, Corbin Hoffner, from soliciting clients he had served previously. Hoffner started at Morgan Stanley in 2020 and became part of a team under a veteran advisor named Samuel "Greg" Seaton in Sebring, Florida.
The two had worked with the firm to devise a plan that would have Hoffner take over Seaton's book of business when he retired. Instead, according to the complaint, Hoffner left Morgan Stanley two days after Seaton's announcement on Aug. 27 that he was stepping down and immediately started trying to solicit clients for the new advisory team he had joined at Raymond James.
Morgan Stanley contends Hoffner has violated both a nonsolicitation agreement barring him from reaching out to ex-clients for a year after leaving and prohibitions on taking confidential client information. What's more, it argues Hoffner's actions threaten to deprive his former colleague Seaton of some of his retirement livelihood.
Morgan Stanley's complaint notes that Hoffner inherited from Seaton a $90 million book of business, generating $600,000 in annualized revenue. Under the firm's Former Advisor Program, Seaton would continue receiving part of that income for five years into retirement as long as his clients stayed at Morgan Stanley, according to the complaint.
"Not only is Hoffner inflicting irreparable harm on Morgan Stanley, his actions threaten to deprive Mr. Seaton of the financially stable retirement he worked decades to achieve since, as noted above, Mr. Seaton will continue to receive a portion of revenues from clients provided they remain at Morgan Stanley rather than follow Hoffner to Raymond James," according to the suit.
A Morgan Stanley spokesperson said, "Morgan Stanley will take appropriate action to ensure that departing employees comply with their legal obligations."
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Hoffner could not be reached for comment.
Morgan Stanley's complaint says Hoffner resigned "en masse" on Aug. 29 with two other advisors, Dale Grubb and Matthew Grubb, along with an assistant to form what's known as
Just before Hoffner's departure, according to the complaint, both Morgan Stanley and Seaton sent letters to Seaton's former clients telling them of Seaton's retirement and informing them that Hoffner would be taking over the relationships. When Hoffner joined Raymond James only two days later, according to Morgan Stanley, he almost immediately began asking those same clients to come with him.
Phil Waxelbaum, an industry recruiter and the founder of Masada Consulting, said the allegations, if true, suggest Hoffner "falsely induced a retiring advisor to introduce him to his client base and further allowed Morgan Stanley to announce to the clients that this was going to be their new trusted advisor."
Waxelbaum said retired advisors often draw substantial income after leaving a firm from the sort of a deal cited in Morgan Stanley's complaint.
"The timing is so tight that this advisor had to know throughout the entire process that he wasn't going to stay," Waxelbaum added.
According to an email submitted as evidence by Morgan Stanley, a former client named Cecilia Hopper recalled Hoffner telling her Morgan Stanley's office in Sebring was closing and that she should come with him to Raymond James' offices in St. Petersburg, Florida. Hoffner is also alleged to have told some former clients that Morgan Stanley was "so big" and would not "allow latitude to service smaller customers."
Tina Turi-Shelley, a Morgan Stanley branch manager for its Sebring, Fort Myers and Punta Gorda, Florida, offices, separately submitted a statement alleging Hoffner mishandled client information. She said a business manager discovered information for clients of Hoffner and Seaton in shredding bins in the firm's Sebring location.
Turi-Shelley also attested that Hoffner had sent gifts to some of Seaton's clients in the months and days before his departure. She said Morgan Stanley sent Hoffner a letter on Aug. 30 asking him to stop his solicitations and received no response.
Morgan Stanley's suit accuses Hoffner of breach of contract, breach of the duty of loyalty and unfair competition. It says it's seeking a temporary injunction in court as a prequel to going before a Financial Industry Regulatory Authority arbitration panel for a permanent injunction on Hoffner's solicitations.
With a temporary order, according to the complaint, a FINRA panel will take up Morgan Stanley's complaint in 15 days.
"In contrast, absent such relief, a hearing before FINRA will not occur for 9-12 months and Hoffner will be free to violate his obligations with impunity and inflict further irreparable harm on Morgan Stanley," according to the complaint.
