Under the Protocol for Broker Recruiting, which both Wells Fargo and RBC are members, advisors are permitted to make rudimentary client-contact information when they move to other signatory firms. But advisors who engage in pre-soliciting clients are vulnerable to prosecution.
Wells Fargo is still struggling to rebuild its reputation after admitting it created fake customer accounts and violated numerous securities rules to bolster its reported bottom line three years ago. The bank in February agreed to pay $3 billion to settle the charges.
In November, its CEO settled charges after being sued by the Securities and Exchange Commission for $25 million. And Wells’ ex-retail banking chief is facing an SEC complaint for $17 million for alleged fraud and is seeking a jury trial.
Wells suffered another setback in its restraining order lawsuit in August when a Michigan federal judge reversed her injunction against a broker in a similar case involving a former J.P. Morgan Securities broker who joined Ameriprise Financial.
Judge Janet T. Neff said: “I don’t see how you could come to the conclusion that a single financial advisor in a small branch bank . . . could inflict irreparable harm on a financial giant like J.P. Morgan.” She characterized the bank’s claim as “almost laughable.”
March, a solo practitioner who departed Wells Fargo with a registered client associate, has a complaint-free BrokerCheck history.
The veteran advisor, who worked at Wells and predecessor firm Prudential Securities since 1995, asked the California court to declare unenforceable any attempt by Wells to include Protocol data as their trade secret. The Protocol permits brokers to take five basic pieces of customer-contact information with them to another signatory firm without fear of being sued.
The complaint, which also seeks damages and legal costs, does not explain what prompted March to file the preemptive litigation. It is noteworthy, however, that Wells Fargo’s broker-dealer has lost 815 reps in the year ending October 30.