Morgan Stanley fights Idaho defecting brokers

When is a successful recruiting effort actually a competitive raid?
Morgan Stanley will test that question in arbitration with the Financial Industry Regulatory Authority Inc., now that an Idaho federal court judge has denied most of its requests for a restraining order against three former brokers.
On May 17, the company filed a complaint against three former Smith Barney brokers in its Coeur D’Alene, Idaho. branch who left to join Stifel Nicolaus & Co.
Donald Scharenberg, Guy Gerber and Michael Armon, the producing branch manager for the office, signed on with Stifel on May 9. In its filing with the court, Morgan Stanley said the three men managed a total of $229 million in assets and produced $1.7 million in revenue between them, which represented more than half the assets managed and revenue generated by the Coeur D’Alene office.
“The Coeur d’Alene MSSB branch is relatively small, with only six financial advisors at the time defendants were still employed there. The departure of three financial advisors, including the branch manager (defendant Armon) has led the relatively small office to experience upset, anxiety, insecurity, uneasiness and concern,” Morgan Stanley said in its filing.
According to the PACER electronic disclosure system, on May 20, the U.S. District Court for the District of Idaho granted the restraining order requests only in regard to Mr. Armon.
“The firm will be pursuing a claim through Finra.” said Morgan Stanley spokeswoman Christine Jockle. She declined to comment further.
“This is just three guys who want to change jobs,” said Steven Andersen, a Boise-based lawyer representing the three brokers. “I don’t know why Morgan Stanley brought this to court.”
Morgan Stanley’s request for a restraining order against the three brokers asked the court to demand they return “documents, records and information removed from MSSB or concerning MSSB’s clients,” to prohibit the destruction of any such evidence that might be used in further proceedings against the three, and to prohibit them from soliciting any other Morgan Stanley employees.
Mr. Andersen said his clients had no documents or information to return to Morgan Stanley, and that Mr. Armon did not violate his employment contract.
In its complaint, Morgan Stanley accused Mr. Armon of violating the Protocol for Broker Recruiting as well as his employment contract, which prohibited him from soliciting other Morgan Stanley employees to join another firm for 18 months after leaving the company. The complaint alleged that Mr. Armon had already tried to solicit two other advisers in the Coeur D’Alene office and another in Washington state to join him at Stifel.