Former Merrill Lynch Advisors Fight Allegations of Corporate Raid
From the desk of Jim Eccleston at Eccleston Law
A dozen former Merrill Lynch advisors who launched their own firm, OpenArc Corporate Advisory, in Atlanta are pushing back against accusations that they orchestrated a “pre-meditated corporate raid.” Merrill, along with Charles Schwab and Dynasty Financial Partners, filed a complaint seeking to block the advisors from contacting former clients, citing a one-year non-solicitation agreement and unspecified damages.
According to AdvisorHub, the advisors have petitioned a federal court in Georgia to deny Merrill’s motion, arguing the allegations are “false and based on supposition and conjecture.” They maintain their departure was a personal decision to start a business, not an outside firm raiding Merrill’s clients. In an affidavit, team leader Erik Bjerke said Merrill is using “improper and deceptive business practices” to retain clients who wish to continue working with the departing advisors.
The advisors further claim Merrill failed to invest in their practice, leading to substantial client losses and $45 million in revenue decline. They assert Merrill knew about their plans and attempted to negotiate retention before placing them on administrative leave on September 23, which the advisors describe as a “set up.”
AdvisorHub reports that, the advisors cited the 2019 Protocol for Broker Recruiting, which allows them to solicit former clients when moving between member firms, and said their right to contact clients was part of an agreement to purchase the practice for $22.5 million over five years. Merrill responded that the payments compensated retiring advisors and did not transfer ownership of the book of business.
Merrill alleges the advisors violated the Broker Protocol by preparing their new practice while still employed, sharing client data with Dynasty and Schwab to secure $90 million in financing, and recruiting team members with equity offers. The advisors counter that these steps constituted lawful preparation for future competition.
Schwab and Dynasty denied wrongdoing, and Dynasty emphasized its commitment to the Broker Protocol. A hearing is scheduled in the U.S. District Court in the Northern District of Georgia.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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