Morgan Stanley has sought injunctive relief in a federal court against two New Jersey advisors servicing some $200 million in assets, saying they violated noncompete clauses when they left the firm to go to LPL in April.

The two advisors are Joseph A. Hutchinson, who worked in Morgan Stanley’s Toms River, N.J., office, and Robert Gibbs, who worked in the Northfield, N.J., office. The civil action was filed in the U.S. District Court for the District of New Jersey. The firm says that clients with almost $20 million have already moved their accounts to the advisors’ LPL affiliate. The two advisors left Morgan Stanley on April 19.

Hutchinson and Gibbs had taken over the client accounts of another Morgan Stanley advisor, Leon Russomanno, who retired, according to the complaint. As part of his retirement arrangement, Gibbs and Hutchinson came to service $175 million in his former assets—85% of the total assets Gibbs and Hutchins serviced, Morgan Stanley said.

“Because of their swift contacts to Morgan Stanley clients and quick transfer of Morgan Stanley accounts to defendants' new firm, Morgan Stanley believes that defendants are violating various post-employment non-solicitation agreements and have retained and/or misused confidential Morgan Stanley client information, including, but not limited to, client contact information," the complaint said.

The firm said Russomanno was entitled to a percentage of commissions for a time after transferring the assets to his two colleagues, but only if they stayed with Morgan Stanley.

“Now, by violating their non-solicitation and confidentiality obligations, defendants are, among other things, depriving Mr. Russomanno of his retirement income as defendants are feverishly transferring the clients Mr. Russomanno previously serviced to their new firm,” the complaint said.

The petition for relief aims to keep the two former advisors from soliciting the clients they worked with at Morgan Stanley.

Morgan Stanley is subject to an arbitration by the Financial Industry Regulatory Authority on the matter, but the firm said it is entitled to seek injunctive relief through the court, saying that if the relief were granted, the Finra hearing could be held within 15 days, as opposed to the regular nine to 12 months.

Morgan Stanley said the two ex-advisors violated not only the non-solicit clauses of their employment agreements with the firm but also violated the Former Advisor Program Active Advisor Agreement, which keeps advisors from soliciting, directly or indirectly, clients served under the agreement for at least a year.

“Since their resignations, defendants have been contacting Morgan Stanley clients, including the clients they serviced in connection with Mr. Russomanno's retirement, which comprise the vast majority of clients they serviced at Morgan Stanley,” the complaint said. “Morgan Stanley clients representing almost $20 million in assets and subject to the [Former Advisor Program] agreement have already transferred their accounts and/or indicated that they are transferring their accounts to LPL. As a result of Defendants' suspected solicitations and retention of client information, Mr. Russomanno's retirement income is in serious jeopardy, and Morgan Stanley will lose client relationships whose value in future years is simply unquantifiable.”

Russomanno’s relationship with Morgan Stanley goes back to 1985. His BrokerCheck page says he was with the firm until 2019.

The complaint said that Gibbs and Hutchinson sent letters denying that they took proprietary information belonging to Morgan Stanley, but the firm claims they did not specifically deny retaining contact information.

Attorneys said that these cases generally turn on whether an advisor was merely announcing a departure or asking for information from a client that could be construed as pushing them to take action. In that case, it could look like solicitation.

Gibbs and Hutchinson are both now working with LPL affiliate River’s Edge Wealth Partners in Red Bank, N.J. A representative at the firm said both declined to comment on the Morgan Stanley filing. LPL had not returned a call by press time.

A Morgan Stanley spokesperson said in an email to Financial Advisor, “Morgan Stanley will take appropriate action to ensure that departing employees comply with their legal obligations.”

LPL has announced a number of hirings from Morgan Stanley just in the past month. In late April, Brett Goodman was tapped from the firm to lead LPL Financial’s corporate development and investor relations teams. Also in April, LPL tapped Morgan Stanley’s Chad Keeler and Brock Rouch, who previously managed $380 million, to join LPL Strategic Wealth Services. Iowa-based Lisa Tesar joined Linsco; at Morgan Stanley, she served $260 million, LPL said.

In January, father and daughter advisors John and Jennifer Tarantino joined LPL from Morgan Stanley, where they managed $250 million in advisory, brokerage and retirement plan assets. Their new firm is called Gladstone Wealth Partners and is based in Florham Park, N.J.