When Morgan Stanley on Monday withdrew from the protocol for broker recruiting, it claimed that competing firms were gaming the pact to their advantage.
Now Morgan Stanley itself is being accused of gaming the process in pulling out.
In a call with reporters Wednesday, attorneys Brian Hamburger and Sharron Ash of MarketCounsel, claimed Morgan Stanley was able to avoid a required 10-day notice period for withdrawing from the protocol.
Morgan announced that it was withdrawing from the protocol on Monday morning, with an effective date of midnight on Thursday—essentially a three-day notice, just in time to kill the deal for any advisors moving this Friday, said Hamburger, MarketCounsel founder.
Ash, MarketCounsel’s chief litigation counsel, said Morgan Stanley submitted a withdrawal letter on October 24, 10 days prior to the effective date, but unlike past practice other signatories to the pact had no way of knowing that until the announcement.
The law firm administering the list, Bressler, Amery & Ross, has in past “routinely” confirmed for wirehouses whether a new RIA breakaway firm has signed up late in the week for a Friday departure, Ash said.
On Monday, “I personally called Bressler Amery and requested a copy of the withdrawal letter from Morgan Stanley [and] and wanted to know when it was submitted, and the effective date [and] I was flatly told in a prepared statement that you will need to wait for the update.”
Updates to the protocol list, which now has about 1,700 firms, are distributed Monday afternoons.
As a result, Morgan Stanley brokers “have to make a very fast decision, on a highly expedited timeline” if they want to move under the protocol’s terms, Ash said.
Morgan Stanley announced its withdrawal Monday morning near the bottom of a press release headlined, “Morgan Stanley Announces New Talent Investment Strategy to Deliver Added Value to Clients.”