A federal judge has slapped a pair of Raymond James advisors with a restraining order over allegedly bringing over millions in client assets in violation of a nonsolicitation deal with their former employer, TD Bank.
But the ban doesn't just apply to the two departed brokers — Brett Bartkiewicz and Gregg Desmarais — and their Connecticut-based practice,
That prompted Raymond James to shoot back in a May 20 countermotion complaining the ban is "grossly overbroad." The firmwide prohibition for Raymond James Financial Services, according to the filing, violates investors' fundamental right "to work with the financial advisor of his or her choice when the advisor changes firms," Raymond James said.
"The order is also grossly overbroad," according to the countermotion. "Under the order, no advisor at Raymond James can provide services to a 'solicited' TD Wealth client even after the client transferred his or her assets to Raymond James. The client's assets would be left completely unattended for the next two weeks. Under the order, no Raymond James advisor, anywhere in the world, may even communicate with a client of TD Bank or TD Wealth for any reason whatsoever. These include clients that have no relation to the individual defendants whatsoever."
Heart of the matter
At bottom of the lawsuit is Bartkiewicz and Desmarais' abruptly announced decision to leave TD Bank and its subsidiary TD Private Client Wealth on April 25 and decamp to Raymond James.
Within a week of their departure,
TD Bank accused Bartkiewicz and Desmarais of
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Seeking a restraining order
In a motion filed after its initial complaint, TD Bank asked the Connecticut federal court to bar Bartkiewicz and Desmarais from reaching out further to former clients. Judge Omar Williams
The judge wrote that, without the order, "the harm Plaintiffs are suffering and are likely to continue suffering would not be redressed by legal remedies, and instead would be irreparable and difficult to quantify and to ascertain."
In its response filed on May 20, Raymond James argued the sort of "overbroad" restraining order imposed by Judge Williams is explicitly forbidden by FINRA rules.
"TD Wealth seeks to prevent not only Bartkiewicz and Desmarais, but every single one of the thousands of Raymond James financial advisors that have absolutely no connection to this dispute from processing a TD Wealth client-initiated account transfer, including a TD Wealth client that was working with a TD Wealth financial advisor who had no relationship to Bartkiewicz, Desmarais, or anyone else with any connection to this dispute," according to the countermotion.
A Raymond James spokesperson declined to comment for this article. TD Bank did not respond to requests for comment.
Time to keep clients
Richard Chen, a legal advocate for advisors and the founder of
"The short term is vital for where the clients will end up going," Chen said. "So this gives them an advantage with clients who didn't necessarily know these guys were going to leave. They can circle up and get those folks to stay."
The dispute comes as Raymond James has stepped up its ability to lure advisory teams from competitors.
Ron Edde, another industry recruiter and the president and CEO of Millennium Career Advisors, said Raymond James hasn't got the most generous recruiting deals among independent broker-dealers but also doesn't offer the least.
"They have upped their deals recently," he said. "And they've had more success since doing it."
Edde said it's somewhat unusual seeing a wealth management team leave a bank for a place like
"Because they know they aren't going to be bringing as many of the clients' assets along with them," Edde said.
Those pesky nonsolicits
Nonsolicitation agreements are among the many ways that firms use to try to prevent client assets from walking out the door when advisors accept generous recruiting deals to go to rival firms. In an industry that sees frequent poaching of advisors and advisory teams every year, nonsolicit deals regularly lead to litigation before courts and arbitration panels.
These sorts of contract clauses have been coming under a good deal of federal scrutiny over concerns that they stymie competition and impede employees' ability to secure better pay by changing jobs. But recent attempts at remedying the situation have been aimed only at
The Federal Trade Commission
Chen and others have said the prohibition is unlikely to affect the sorts of nonsolicitation clauses that remain far more common in the wealth management industry. There are situations, though, when a nonsolicit starts encroaching on noncompete territory.
Some nonsolicitation agreements, for example, seek not only to prohibit advisors from trying to reach out to former clients but also stop them from accepting business from clients who take the initiative themselves.
"When nonsolicits get too broad, they look a lot like noncompetes," Chen said. "They can look like something that's designed to prevent someone from going out and carving out an opportunity and making a livelihood."
Contracts, contracts
Among other things, Bartkiewicz and Desmarais are accused of breach of contract, tortious interference with customers, tortious interference with a contract and violations of the Connecticut Unfair Trade Practices Act. TD Bank said the pair tried to solicit at least one former client by offering a 15% rate reduction for following them to Raymond James. TD Bank said both Bartkiewicz and Desmarais were familiar with its fee structures through long employment at the firm.
Bartkiewicz started at TD Private Client Wealth in 2016 following stints at a long list of firms including Smith Barney, Merrill, Wachovia Securities, Fisher Investments and Mercer Global Advisors. Desmarais, technically a private client relationship manager in his former position, also started at TD Private in 2016, according to the Financial Industry Regulatory Authority's BrokerCheck database.
