Morgan Stanley Smith Barney has filed a complaint against six of its former brokers in Illinois for luring clients to their new brokerage, according to court documents. The suit was filed last week in Chicago federal court.
The firm accuses advisors Ronald Ouwenga, Brian P. Thomas, Jeff F. Schimmelpfennig, Zachary J. Birkey, Michael J. Bruner and Myron Hendrix of the Heartland Group of violating their nondisclosure and non-soliciting agreement with Morgan Stanley. The Heartland Group left Morgan Stanley’s office in Bourbonnais, Ill., for Stifel Nicolaus and Company’s office there.
Morgan Stanley claims the brokers took documented information from it and solicited clients they once managed under Morgan Stanley’s purview.
In November 2017, Morgan Stanley withdrew from the broker protocol, which the company helped form over a decade ago. Since then, it has sued a handful of its former brokers, seeking temporary restraining orders and emergency injunctions to prevent further solicitations until the courts have settled matters.
That’s essentially what Morgan Stanley wants to do this time around, too. The client list handled by the Illinois advisors is worth $550 million in assets, according to court documents, and $4.2 million in revenue. The team was handling $660 million in total assets while at Morgan Stanley, the complaint says.
The firm claims a large stack of files “appears to be missing” from the Bourbonnais branch office as proof of its accusations.
“These files took up several file drawers, but now make up approximately only half a drawer,” said Morgan Stanley in its complaint.
The company believes the six advisors are causing it irreparable harm and a loss of confidentiality and that the move may inspire other brokers to break their contracts.
The six brokers are represented by the law firm of Sperling & Slater. As of Monday afternoon, no one at the law firm could be reached for comment.