August 2, 2021
Morgan Stanley Prosperity Management has requested a federal court docket in Oregon to restrain a former broker whom it fired in July as aspect of its extended-running probe of miscoding of output quantities on inherited accounts.
The wirehouse alleged that Robert S. Sevcik is now trying to solicit previous clients to join him at his new agency, D.A. Davidson in Medford, in violation of the agreement he signed with a retired broker, James Maddux, in 2017, according to a criticism submitted Friday in U.S. District Courtroom in Oregon.
Sevcik, who was terminated July 12 for using credit for trades that ought to have been shared with Maddux, managed about $160 million in assets that he experienced inherited as portion of the Previous Advisor Software and which produced $1 million in once-a-year earnings, Morgan Stanley alleged.
It is the second time Morgan Stanley has long gone to courtroom to defend Maddux’s former accounts right after it two a long time in the past attempted–ultimately unsuccessfully–to handcuff a different former member of Maddux’s five-broker Cedar Ridge Group group, David Sayler, who left to join UBS.
Due to the fact his registration with Davidson on July 26, Sevcik has been calling prospects and informed at the very least 1 that he was the “‘fall guy’ in a regulatory investigation involving Morgan Stanley” in energy to woo the client to Davidson, in accordance to the grievance. Sevcik’s opinions also violated Monetary Industry Regulatory Authority policies by earning misleading statements to the general public, Morgan Stanley mentioned.
“Morgan Stanley believes that Defendant’s contacts with purchasers, together with his misleading statements, will only expand exponentially, in an work to solicit business enterprise away from Morgan Stanley and more deprive Mr. Maddux of his retirement cash flow,” the firm argued in its criticism.
Morgan Stanley has submitted a parallel assert with Finra for a long-lasting injunction and damages that will commence on an expedited basis if the TRO bid is productive.
Sevcik, who started out his vocation at Morgan Stanley predecessor Smith Barney in 2008, according to BrokerCheck, could not straight away be attained for remark.
A spokeswoman for D.A. Davidson declined to comment citing coverage not to discuss staff matters. The Great Falls, Montana-dependent agency has 760 brokers, in accordance to its web site.
“Morgan Stanley will choose acceptable action to ensure that departing staff members comply with their authorized obligations,” a spokeswoman for the wirehouse wrote in an electronic mail.
Former Morgan Stanley brokers are prohibited underneath the FAP from soliciting accounts for at least a calendar year, or for the duration of the five-12 months transition time period, in accordance to the paperwork.
“I thought I could rely on Defendant but, regretably, my believe in was misplaced,” Maddux wrote in a declaration connected to the grievance in opposition to Sevcik. “Not only is Defendant trying to divert shoppers to a competitor in violation of his obligations, I have considering that found out that, in my perspective, he stole [emphasis in original] tens of thousands of pounds from me.”
Maddux, who worked at Morgan Stanley for 24 of his 37-yr occupation, did not return a request for further comment. He claimed in an job interview previous thirty day period before the restraining purchase was filed that the episode experienced shaken his trust in the retirement account plan.
“It’s sweet, and a wonderful plan till you experience like you have no recourse,” he mentioned.
Morgan Stanley’s lawsuit explained the miscoded trades amounted to “tens of countless numbers of dollars of retirement money.” A man or woman acquainted with the make any difference explained it is compensating Maddux and other retired brokers for improperly coded trades.
Morgan Stanley has fired in excess of a dozen brokers as section of the inherited account critique. A initially wave of terminations involved far more than 10 in November, but compliance interviews and dismissals appear to be ongoing.
“It took decades for Morgan Stanley to uncover Defendant’s inappropriate carry out and when it did, and had accomplished its investigation, Morgan Stanley terminated Defendant’s employment,” the business stated in the complaint.
Quite a few other veterans who were fired have been equipped to come across new residences, including a California broker who earlier in July confident the rest of his staff to be part of him at unbiased broker-seller LPL Fiscal.