TD Bank and its private client wealth business allege that an advisor who left the company for Raymond James in February disparaged TD to the bank’s clients and breached his contractual obligations not to solicit them.
TD, which filed a court complaint earlier in April against Adam Bracy and Raymond James, contends that soon after Bracy, an employee for over 10 years, “abruptly resigned,” about 30 clients with $48 million in assets migrated from TD to Raymond James.
The matter will now be handled in Financial Industry Regulatory Authority arbitration.
TD contends that it has “learned that Bracy has disparaged TD Bank to its clients and solicited the business of TD Bank’s clients in violation of his contractual obligations not to interfere with its business relationships and not to solicit its clients,” according to the court complaint.
“Raymond James has encouraged, assisted, and supported Bracy’s wrongful solicitations as part of its pattern and practice of hiring employees from competing institutions and bearing the risk of litigation and damages in the belief the long-term financial benefit of wrongfully diverting clients outweighs the cost," it says.
TD contends that Bracy disparaged the bank’s reputation and that he asserted that Raymond James’ offerings were higher quality, according to the complaint.
Bracy and Raymond James deny wrongdoing, accuse TD of trying to enforce “unconscionably broad restrictive covenants,” and describe the misconduct claims as frivolous.
This week, after the parties agreed to terms, the U.S. District Court for the District of New Jersey issued a preliminary injunction barring Bracy from soliciting or initiating contact with TD clients with whom he worked or was otherwise associated with while at TD, among other activities.
Under the preliminary injunction, Bracy, who is vice president, investments, on a Raymond James boutique wealth management team, also is prohibited from making disparaging remarks about TD to such clients, and communicating with them about TD’s “leadership, capabilities, and operations,” or about TD’s fees and offerings unless a client first raises the matter.
The preliminary injunction also prohibits Bracy from using, disclosing or transmitting TD material or confidential information related to the bank’s employees or clients, and requires him to return to TD documents related to its clients, employees and business that he may have kept after leaving the bank.
By consenting to the agreement, Bracy and Raymond James don’t admit to any liability or wrongdoing.
The injunction will stay in effect until Feb. 21 or until the FINRA arbitration panel enters a materially identical injunction, whichever is earlier.
“What TD seeks is a gross violation of FINRA Rules, New Jersey law, and public policies in favor of clients having the choice of their financial advisors; and against the stifling of competition,” Bracy and Raymond James contend in an April 11 response to TD’s complaint.
“Individuals are justifiably concerned about the status of their investments going forward, and they need to rely upon their financial advisors to guide them through these highly turbulent and unpredictable times,” Raymond James and Bracy said, noting the stock market selloff in recent months.
“This is not the time to prohibit individuals from receiving straight answers to their investment-related questions from the advisor with whom they have long established relationships, and it is not the time to prevent clients from following their advisor to their new place of employment,” the response says.
“TD’s attempt to inhibit the ability of clients to choose to follow Bracy to Raymond James and stain Bracy’s reputation in the industry in the process is especially egregious because Bracy has done nothing wrong and acted in a far more conservative manner than his agreements require,” it says.
Image: Shutterstock
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.