A firm's business model matters in deciding whether the protocol applies, says Michael J. McAllister, a New York-based lawyer who represents brokerages. Some divisions develop relationships with customers who are referred by other units in the company, he says. Units that develop client relationships through internal channels "generally aren't protocol members because these advisers don't generate their own customer lists," he says. The protocol aims to deal with advisors who usually bring in their own clients, he says.

Richard Roth, a New York-based securities lawyer, says the bank's argument appears "cogent," since U.S. Trust "is not a place where you walk in to open a brokerage account. They get their clients through other means," he says.

Still, the advisors' registration as brokers under the Merrill Lynch banner, as well as use of that brokerages' platform as a means of doing at least part of their business, is likely to be aired as an issue in court.

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