With BofA reps under the recruiting protocol, rivals may pounce

Recruiters at competing firms are likely to reach out to bank brokers at Bank of America Investment Services Inc., according to industry observers.
That’s because BAIS brokers are now employees of Merrill Lynch and are covered under the recruiting protocol, which lets departing brokers take customer contact information to a new firm without fear of litigation.
While initially there were questions about the bank brokers’ status, Merrill spokesman Bill Halldin said they are members of the Thundering Herd and are covered by the protocol.
BAIS began terminating its registration as a broker-dealer in October.
Merrill Lynch & Co. Inc. is a signatory to the protocol, while BAIS, the bank-brokerage unit of Bank of America Corp., is not.
Now that they take customers with them, some BAIS reps already are eyeing the door. “Some [BAIS reps] who have contacted me are contemplating leaving,” said David Gehn, a lawyer at Gusrae Kaplan Bruno & Nusbaum PLLC.
Before the shift, BAIS had sued some brokers who had left this year, said Patrick Burns, a Beverly Hills, Calif. attorney who represents brokers in transition.
“This is a 180-degree change in way they do business,” he said.
The decision by Bank of America Corp., the parent of both BAIS and Merrill, to let the brokers switch is interesting because bank brokerages have traditionally been protective of their client base. Many brokerage customers are developed from the ranks of the banks’ depositors.
If BAIS brokers are able to transfer accounts, they might be able to command attractive recruitment offers, Mr. Gehn said.
But one source close to Merrill, who asked not to be identified, said there’s no reason for BAIS reps to leave now, after being upgraded to Merrill’s platform.
BAIS never signed the protocol because its replacement by Merrill’s broker-dealer had been planned all along, this source said.

Related Topics: Bank Of America Corp., Merrill Lynch