(Dow Jones) Morgan Stanley Smith Barney's suit against five employees who left to join HighTower Advisors and its regulatory complaint against HighTower itself are being cast in media reports as a power play to make brokers think twice about leaving.

In fact though, MSSB's actions jeopardize its own recruitment and public-relations efforts. With those risks in mind, it may be that MSSB views its case as an opportunity to underline the terms under which brokers can take their leave from the world's biggest brokerage.

MSSB says the five members of a Rye, N.Y.-based team that recently pulled up stakes for HighTower told dozens of its clients about their impending move while still on MSSB's payroll. Also, it alleges, they took client-account information--stuff that belongs to the brokerage, not its erstwhile employees-with them when they left. And it says that HighTower helped them do it.

These practices aren't allowed under the terms of the Protocol for Broker Recruiting, a six-year-old set of guidelines intended to end legal wrangling between firms while safeguarding clients' privacy and freedom to move when their brokers switch firms. By last summer, more than 300 firms were signatories to the protocol, including MSSB and HighTower.

Last week MSSB filed the lawsuit against former employees Steven Ayer, Roman Ciosek, John Lang, Peter Lang and Jeffrey Sullivan in the Supreme Court of New York to get "immediate injunctive relief to prevent further irreparable harm to Morgan Stanley Smith Barney," MSSB says in a statement. At the same time, MSSB filed an action with the Financial Industry Regulatory Authority against the brokers and against HighTower for "aiding and abetting" the brokers' "wrongful conduct."

Publicly at least, and MSSB's clout notwithstanding, HighTower isn't worried about the suit. The joint venture of Morgan Stanley's (MS) private-client unit and Citigroup Inc.'s (C) retail brokerage Smith Barney fielded more than 18,000 advisors and managed $1.6 trillion at the end of 2009. Counting the group it just brought in from MSSB, which calls itself Strata Wealth Management, HighTower has 11 individual advisor groups and more than $15 billion under management.

"It's not something we believe is significant from a legal perspective," says Elliot Weissbluth, HighTower's chief executive, and a former litigation attorney. "It's a failed intimidation tactic."

HighTower, a hybrid investment advisory and broker-dealer that launched late in 2008 with a mandate to pull in top wirehouse producers as co-owners, has never before had partners sued as a result of a liftout, according to Weissbluth.

"We're very direct about what we do, and we make it clear that we have no desire not to comply with the protocol," says Weissbluth.

Despite HighTower's calm under fire, MSSB may be set to press its case against the Strata Wealth team, says William Nelson, a Denver-based partner with the law firm Rothergerber, Johnson and Lyons LLC who specializes in such matters.

As a long-standing signatory to the recruiting protocol, MSSB probably understands that, although suing departed brokers can keep restive advisors in line, it's an expensive retention tactic that can harm its own recruiting efforts, according to Nelson, who says he has no knowledge of MSSB's case against the Strata Wealth brokers other than what he's gleaned from news reports.

"In general terms, not talking specifically about [MSSB], on one hand you have the firm talking up its story, saying what a great place it is to work at, and then it's saying, 'If you ever try to leave, we're going to come after you tooth and nail,'" says Nelson. "It's also putting out word that it views customers as property. That's why more forward-thinking firms came up with the protocol."

From that perspective, MSSB may feel it has something solid on the Strata Wealth team and, so armed, it may be eager "to send the message that if you leave in violation of the protocol, it's going to be expensive for you, and not easy," says Nelson.

MSSB implies as much in a written statement, the only word on the case it will divulge at this stage in the game. "[MSSB] has a strong case," it says. "It would not have filed it otherwise."

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