Barely a week after RBC lured a $5.5 billion team away from UBS,
The Switzerland-based UBS Group filed suit in a federal district court in Atlanta on Aug. 25 to prevent three former brokers from soliciting some of their previous clients after moving their team to
In its lawsuit, UBS accuses the trio of wasting no time reaching out to former clients, even though they had signed nonsolicitation agreements barring them from making contact for at least a year after leaving. The suit alleges that they've already transferred $16 million worth of client assets and secured commitments to move over hundreds of millions more.
"Although each of the Defendants had signed agreements containing non-solicitation covenants as well as agreements containing confidentiality covenants, those contractual promises have not stopped them from brazenly soliciting UBS clients and unfairly competing," according to the suit, which was first reported on by AdvisorHub. "Instead, within hours of their resignations, they immediately and unlawfully began soliciting UBS's clients in a malicious effort to pirate some or all of the $5 billion in managed assets UBS helped them develop."
A UBS spokesperson declined to comment. Lauer, Glasgow, Rubinas and RBC didn't immediately respond to requests for comment. RBC was not named as a defendant in the suit.
UBS states it has reason to believe RBC offered the former UBS team a recruitment package that could be worth as much as $70 million, depending on how much client assets they can eventually transfer over. UBS said its former ESOP group — the acronym stands for employee stock ownership plan — had specialized in advising business owners who were looking to pass their companies on to someone else.
Read more:
The group, which included at least seven other UBS employees who left for RBC, brought in $21 million in the past year, according to the suit. The $5.5 billion in assets they oversaw were mostly inherited from a senior financial advisor who retired in 2020.
That retiring advisor — unnamed in the suit — arranged to transfer assets he oversaw to the ESOP group through what was known as UBS's ALFA program. ALFA, which stands for Aspiring Legacy Financial Advisor, allowed the retiring advisor to continue collecting commissions and revenue from his previous accounts over a period of five years after transferring them to his younger colleagues. The ESOP team's share of those payments was to increase gradually over time.
The members of the ESOP group entered into the ALFA agreement in 2020 and were barred by it from soliciting clients for another employer for five years. Lauer is separately alleged to have signed an "ALFA premier plus" agreement in 2021 offering her a loan of more than $7 million in return for a pledge that she would not try to bring clients with her should she leave.
According to the suit, an RBC employee — formerly a manager at UBS — sent a current UBS employee a text stating "We cracked the ALFA code … Please let me know when you are ready to learn more." Neither the sender nor receiver of the message is identified in the lawsuit.
The suit also accuses the trio of printing out thousands of documents including confidential information such as client and prospect lists.
"The timing and volume of printing, coupled with the nature of the documents printed, strongly suggest they were printed and taken by Defendants to be used for their transition to RBC, rather than for any legitimate UBS business purpose," according to the suit.
This isn't the first large team to depart UBS for RBC in recent weeks.
The transfers come amid increased scrutiny by federal regulators of noncompete clauses and other contract provisions meant to keep employees from taking business from a former employer after leaving.
Brokerages tend to be freer to pursue former employees for nonsolicitation violations if they are not part of the so-called broker protocol, a legally binding pact spelling out what sorts of information advisors can take with them when they leave. The protocol allows advisors who are switching firms to take along five types of information — client names, addresses, phone numbers, e-mail addresses and account titles.
Read more:
Michael Terrana, the president and CEO of the Chicago-based recruiting firm Terrana Group, said advisors leaving firms that aren't members of the protocol can generally only hope that their former clients reach out on their own to them. When advisors leave for another firm, their former employers many times will send their clients a message informing them of the departure and where they are going.
"That's all it can basically say," Terrana said. "And then maybe the client picks up the phone and calls the advisor and says, 'I didn't realize you left, but I want to come with.'"
In its suit against RBC, UBS further alleges that it received several calls on Aug. 21, just three days after the team had resigned, from clients who were seeking to pay off loans so they could move their assets to RBC. It states that Rubinas or another member of the ESOP was on the calls and offered services to make the transitions easier. UBS also accuses the trio of spreading misinformation about its loan rates in an attempt to persuade their former clients they could secure a better deal with RBC.
In seeking to enjoin Lauer, Glasgow and Rubinas from reaching out to former clients, UBS is accusing them of breach of contract and breach of fiduciary duty, among other violations. UBS has separately filed an arbitration request for damages and injunctive relief to the Financial Industry Regulatory Authority, the broker-dealer industry's self-regulator.
