Merrill Lynch has accused Dynasty Financial Partners of backing out of an agreement to arbitrate a legal dispute centering on the wirehouse's allegation that Dynasty and others raided a $129 billion Merrill business to start a new RIA firm.
"Dynasty has now reneged on its agreement to arbitrate," Merrill contends in a Feb. 12 court filing, citing a September court hearing in which it says the parties, including Schwab and a dozen former senior employees, agreed to put the matter in Financial Industry Regulatory Authority arbitration.
In the months following the hearing, "Dynasty quietly took a position, incompatible with the record, that it never consented to FINRA arbitration and wouldn't submit to FINRA jurisdiction," Merrill contends. The U.S. district judge overseeing the court case stayed proceedings in October, pending FINRA arbitration, and denied Merrill's request for a temporary restraining order and preliminary injunction.
"Dynasty never informed Merrill, either during the TRO hearing or in the nearly three months thereafter, that it did not consent to arbitrate. Dynasty informed Merrill for the first time that it would not consent to arbitrate on January 14, 2026. The lack of candor, with Merrill and with this Court, is shocking," Merrill contends, saying it's now at a "procedural impasse."
Merrill asked the court to either lift the stay on court action against Dynasty specifically, allowing the wirehouse to pursue its case against advisory services firm in court on a parallel track with the FINRA arbitration, or require Dynasty to engage in the FINRA arbitration. Merrill requested that at minimum, the court lift the stay to permit Merrill to obtain discovery and depositions from Dynasty for use in arbitration.
Dynasty said Thursday in a statement sent to ThinkAdvisor, "Merrill sent an email to the judge requesting to lift the stay in the federal case or order Dynasty to arbitration. The judge denied the request. Merrill just filed a formal motion requesting same. Dynasty strenuously disagrees with Merrill's continuing mischaracterizations at every point in this matter and we are preparing our response to this most recent attack."
In its September complaint, Merrill accused Dynasty, Schwab and a dozen former senior employees of staging a "pre-meditated corporate raid" of its Atlanta-based Global Corporate and Institutional Advisory Services business to start a Dynasty-backed advisory firm, OpenArc. At the time, 120 of 170 staff members, including 70 financial advisors, had moved to OpenArc.
Schwab, providing custody services to OpenArc, has called the allegations "unfounded speculation" and said it holds itself "to the highest standards of integrity and our business practices are rooted in respect for individual choice and fair competition."
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