Morgan Stanley is seeking a temporary restraining order and injunctive relief in federal court against a former financial advisor who the company alleged quit his job and began soliciting the firm’s clients to join him at his new independent registered investment advisor.
In its complaint, filed Monday in the U.S. District Court for the District of Arizona, Morgan Stanley accused Zakriah Gardezy of Scottsdale, Ariz., of breach of contract and breach of the duty of loyalty.
Gardezy had been with the company since June 2021, according to BrokerCheck. The complaint said he resigned on March 15 to join a direct competitor, Wealthstone Private Wealth Management, in a nearby office.
Gardezy, the complaint contends, had not developed much business of his own but was assigned to work with an experienced team of advisors servicing clients “representing approximately $2 billion in assets under management and almost $8 million in gross annual revenues to Morgan Stanley.” That team, the Viewpoint Wealth Management Group, was listed No. 8 on Forbes’s 2024 list of “Best-in-State” wealth management teams. According to the listing, the team managed $1.9 billion in assets under management.
The bank said that it had transferred clients with “tens of millions of dollars in assets in their accounts” to Gardezy through its referral program. Those accounts generated hundreds of thousands of dollars in revenue for Morgan Stanley, the complaint said.
Soon after resigning his position, Gardezy began contacting clients and offering them incentives such as a 50-basis-point fee discount if they dropped Morgan Stanley and followed him to his new firm, the complaint said. It also noted that most of the clients he called were referrals by Morgan Stanley’s E*Trade division to the team he worked with. The bank also alleged that Gardezy walked off with confidential client information, which enabled him to contact the clients.
Gardezy, the complaint said, ignored correspondence from the bank “reminding him of his contractual and other obligations to Morgan Stanley.”
The complaint said, “unless [Gardezy] is temporarily and preliminarily enjoined from violating the terms of the agreement, Morgan Stanley will be irreparably harmed by: (a) disclosure of trade secrets, client lists and other confidential information which are solely the property of Morgan Stanley and its clients; (b) loss of clients, damage to office stability and a threat to the enforcement of reasonable contracts; and (c) present economic loss, which is unascertainable at this time, and future economic loss, which is presently incalculable.”
The complaint noted that Morgan Stanley has also filed an arbitration claim against Gardezy with the Financial Industry Regulatory Authority in which the bank asks for a permanent injunction and damages.
Morgan Stanley did not respond to a request for comment.
Gardezy, who could not be reached for comment, began his career with Wells Fargo Clearing Services in 2017 and moved to Morgan Stanley in 2021.