UBS Reaches Temporary Pact with Ex-Brokers on Customer Contact

30 Nov    Investing News

UBS and a former producing manager it accused of trying to sell his branch to “the highest bidder have agreed to a preliminary injunction in which the manager and two colleagues who joined Morgan Stanley will not solicit former clients for a year but can call clients they introduced to their former team.

The “agreed preliminary injunction” issued on Thursday in U.S. District Court in the southern district of Ohio’s eastern division imposes the modified ban on Michael Platte, but allows him and brokers Lance White and Matthew Penrod to initiate contact with clients introduced to their UBS team “at its inception or during its existence.”

It also permits the trio to return phone calls and emails from UBS clients, attend meetings prescheduled or requested by them and to process their account transfer requests.

The three brokers agreed to return all “UBS confidential information” in their possession or control, excepting information they received “directly from clients after their resignations” or available from public sources.

The Platte team and two others that left in the past year for Morgan Stanley and Wells Fargo Advisors produced more than 70% of the New Albany, Ohio, branch’s $20 million in revenue, UBS said in seeking the preliminary injunction.

The injunction expires in October 2020, or earlier if ordered by the court, or agreed to by the parties, according to the order signed by Judge Michael H. Watson.

In obtaining the order, UBS can ask the Financial Industry Regulatory Authority to accelerate the hearing process for a parallel arbitration complaint seeking monetary damages against the brokers and Morgan Stanley that it has filed with the regulator.

“This order enforces all the terms of the advisors’ agreements, which include non-solicitation provisions,” a UBS spokesman said in an e-mail. “We are pleased that it has been entered and that UBS obtained all the injunctive relief that it sought.”

A person advising the team described the “settlement” as favorable to the brokers.

The solicitation freeze extends to customers Platte and Penrod built through a partnering agreement signed four years ago with UBS’s private wealth unit that works with upper-high-net-worth clients, according to the order.

The order also enjoins Platte from trying to recruit UBS employees, and says the confidential information he agreed to return includes information about compensation.

Platte and Penrod joined UBS in February 2007, and White in September 2008.

In the 12 months prior to their October exit, they generated about $4.5 million of fees and commissions, said a person familiar with their practice.  They are working at a Morgan Stanley branch in Columbus, but expect to open new quarters for the firm in New Albany, the person said.

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