Financial Service Firms Engage in Raiding Suit
From the Desk of Jim Eccleston at Eccleston Law LLC:
MetLife Inc. and LPL Financial, two large financial services firms, have entered a heated dispute over the poaching of 60 brokers. In an unresolved claim from May, MetLife claims LPL poached the large amount of brokers since October 2014. The actions allegedly have done irreparable harm to MetLife.
In the claim, MetLife states that LPL “shows no signs of stopping.” While MetLife did not specify the damages it seeks, the company did ask for LPL to be enjoined from soliciting more MetLife employees or customers.
For a successful raiding claim, a firm normally must take at least a third of an office’s revenue and have harmful intent. LPL employed six of MetLife’s top-producing brokers, a group who collectively managed about 490 million in assets. In its defense, LPL is expected to use the “lifeboat defense.” That means that reps were going to jump ship anyway, so the company simply gave them a place to land.
In recent years, MetLife made policy changes that purportedly upset employees. The company switched the employment status of brokers from employees to independent contractors. That caused a lower payout and reduced benefits for brokers.
Additionally, MetLife is changing clearing firms and is moving to Fidelity’s National Financial Services. That change made it a good time for brokers to switch firms because clients already would be transitioning to a new platform.
MetLife reportedly has shed thousands of brokers in recent years due to company shake-ups and falls in variable annuity sales.
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Tags: James Eccleston, Eccleston Law Offices, LPL Financial, MetLife