An ex-Morgan Stanley team is taking a unique approach to rebutting a lawsuit by their former employer: They’re going after the wirehouse’s decision to leave the Broker Protocol.
The team, which managed $660 million and
The firm got team members to sign an agreement containing non-solicitation language just days before its protocol exit in November 2017, according to the six advisors. Morgan’s lawsuit accuses them of breach of contract.
The case is the latest example of how
The wirehouse
Morgan Stanley claims clients have complained to the firm of being solicited to move their business. The firm did not name these clients in documents filed last week in federal court in Chicago. It did point to a Facebook post from a wife of one advisor that it said clients had liked or commented on. The woman said in the post she was proud of her husband and his colleagues’ career move, according to a screenshot Morgan Stanley included in its court filing.
Dynasty, Raymond James and Stifel are among the biggest beneficiaries of recent advisor moves.
Advisors Ronald Ouwenga, Brian Thomas, Myron Hendrix, Michael Bruner, Jeff Schimmelpfennig, and Zachary Birkey deny the firm’s charges, arguing they took no documents and solicited no clients.
In addition, the brokers contend the joint production agreements were dated Nov. 3 ― three days before Morgan Stanley exited the Broker Protocol. This was well after Morgan Stanley sent notice on Oct. 24 of its withdrawal to the law firm that administered the protocol, “which means that [Morgan Stanley] knew that it was exiting the protocol but omitted this from defendants leading them to believe that the protocol would be applicable,” the brokers claim.
But convincing a judge that this potential fact pattern is compelling could be an uphill struggle, says Ross Intelisano, an attorney at Rich, Intelisano & Katz and who is not affiliated with the case.
“It’s a tough issue because they signed an agreement,” says the New York-based Intelisano. “But perhaps the combination of that could potentially sway a judge. It’s certainly not automatic, but I find it interesting and a judge may well too.”
CEO Ron Kruszewski received praise for leading the firm's wealth management unit to a record for revenue, despite costly legal setbacks.
As Vice President, Underwriting Research and Development, Jackie Waas is involved in investigating and developing underwriting innovations, with an emphasis on concept development, research, presenting new ideas, and participating in concept validation activities.
She started her career with RGA in 2018 as Director of Underwriting Services, where she supported direct-to-consumer accelerated offerings, including assisting with the auditing of the e-underwriting program and helping develop digital health scores while supporting the Digital Health Data team.
Prior to joining RGA, Jackie was an Underwriting Business Consultant and automated underwriting systems subject matter expert with Legal & General America for four years after working in an underwriting capacity with the company for nine years. She also had five years of underwriting experience with AXA Equitable and formerly worked as a marketing manager for Steele Rubber Products.
Jackie received a Bachelor of Arts with a major in communications and a minor in psychology from Lenoir-Rhyne University in North Carolina. She is a Certified Fellow of the Academy of Life Underwriting, a Fellow of the Life Management Institute, and a Fellow of the Financial Services Institute. She is also an Associate, Reinsurance Administration; Associate, Insurance Agency Administration; and an Associate, Insurance Regulatory Compliance. Jackie also holds the Professional, Customer Service Institute designation, and she is a member of the Association of Home Office Underwriters.
Guizhou Hu is Vice President, VP, Head of Risk Analytics at RGA, where he supports global RGA underwriting initiatives and produces internal and external thought leadership pieces based on RGA's in-depth risk analytics. Before joining RGA in 2018, Guizhou served as Vice President, Chief Decision Analytics, for Gen Re and as a Senior Vice President for BioSignia Inc. Guizhou holds a medical degree from Beijing Medical University and a Ph.D. in Philosophy from Cornell University.
There could also be validity to an argument based on Morgan Stanley’s Broker Protocol reversal, since advisors had been recruited under it for years, according to Jim Eccleston, another lawyer not affiliated with this case.
“There is a long standing principle that someone cannot come into an equity court with unclean hands. I could see this judge ruling along those lines, meaning that Morgan Stanley has unclean hands because it did up until recently did exactly what these reps are accused of doing,” the Chicago-based Eccleston says.
A spokeswoman for Morgan Stanley declined to comment on the case. A Stifel spokesman and attorneys for the advisors could not be reached for comment — the team is represented by lawyers Gary Blackman, Jason Hirsh and Jamie Burns at Chicago law firm Levenfeld Pearlstein.
Still, the advisors contend this history is “critically important” to the judge’s analysis.
Morgan Stanley is “filing countless lawsuits” against advisors such as the Bourbonnais team “who joined the firm with one expectation only to now have their hands tied for reasons outside their control.”
The team also contends that the wirehouse makes no specific complaints against four of the six advisors and that Morgan Stanley’s non-solicitation agreements are not enforceable under Illinois law.
Judge Joan Gottschall has yet to rule on Morgan Stanley’s motion for a temporary restraining order.
The firm is also pursuing a FINRA arbitration case against the advisors, according to court filings
