Source Says Broker Ended Up A Pawn Between Warring Firms

The weekend client raid is an open secret. A financial advisor quits late on a Friday and spends the next couple of days helping his new employer solicit his old customers. There’s even a broker pact that suggests it is all a refined gentleman’s game.

Until things fall apart.

A new arbitration case alleges that Oppenheimer & Co. stepped well beyond the bounds of propriety in mounting a client raid over a three-day weekend earlier this summer. Such incursions are common, according to people in the industry. What’s unusual is for details of these raids to become public, in part thanks to an industry pact that governs broker job-hopping in an effort to tamp down litigation. The Oppenheimer matter -- told through arbitration and court filings, letters and e-mails -- provides a vivid study of some of the new strains to the old ground rules of client raiding.

On the Friday afternoon before Memorial Day, an investment advisor with a small firm called Euro Pacific Capital composed a short note to his chief executive: He was resigning, effective immediately.

The advisor, Steven Savoy, pressed "send" from inside an Oppenheimer office in Saddle Brook, New Jersey, according to Euro Pacific, launching a plan weeks in the making. Euro Pacific claims in its arbitration complaint that Savoy had left with confidential client lists that he and his new boss used to contact scores of people over the holiday weekend. Letters announcing Savoy’s move, with tabbed and highlighted account-transfer forms, allegedly sat ready for FedEx delivery.

Euro Pacific complained. Oppenheimer dismissed Savoy before he could collect what amounted to a signing bonus of more than a quarter-million dollars. Instead of holding down a new job at a bigger firm, he’s out of the business.

Savoy, reached by telephone, declined to comment.

Euro Pacific says the solicitations cost it more than $10 million in funds under management. Its complaint, filed with the Financial Industry Regulatory Authority, asks for some $40 million in restitution from Oppenheimer. Euro Pacific also asked a federal court in Connecticut to keep Oppenheimer and Savoy from soliciting its customers until the matter is arbitrated. Euro Pacific’s complaints to the court and Finra accuse Oppenheimer of slander, conspiracy, unjust enrichment and theft of trade secrets.

Euro Pacific’s claims are without merit, Oppenheimer said in a statement, disputing that hiring one broker for one month could constitute a raiding-related claim. In a countersuit filed this month with Finra, the financial industry’s self-regulatory body, Oppenheimer said Savoy told them he had no contractual obligations restricting his move to the new firm.

Switching Sides

Savoy’s defection emerges in rich detail in part because the source of many of Euro Pacific’s allegations is Savoy himself. Facing a suit from his old employer and dumped by his new one, Savoy began cooperating with Euro Pacific.