Judge Denies Merrill Lynch's TRO in Advisor Transition
From the desk of Jim Eccleston at Eccleston Law
A federal judge has rejected Merrill Lynch’s request for a temporary restraining order (TRO) against a group of former financial advisors who left the firm to launch their own independent practice, OpenArc Corporate Advisory, under Dynasty Financial Partners’ platform with custody at Charles Schwab.
At the center of the dispute was whether the Broker Protocol applied to the advisors’ transition, as reported by AdvisorHub. The Protocol is an industry agreement that allows brokers to take limited client information—such as names, addresses, phone numbers, email addresses, and account titles—when moving from one member firm to another, provided both firms are signatories at the time of the transition.
According to AdvisorHub, the advisors argued that both Merrill and Dynasty were members of the Protocol, and that they followed its terms by limiting the information taken and properly disclosing client lists. For some reason, OpenArc, the newly formed RIA, did not join as a Protocol member ahead of or at the time of the transition. However, the judge found that the evidence did not support Merrill’s contention that the Protocol was violated or that the advisors’ transition fell outside its protections.
The judge also rejected other factual claims by Merrill. For example, Merrill maintained that the advisors’ actions—such as alleged recruitment efforts and sharing client information before resigning—breached contractual and industry obligations.
According to AdvisorHub, a Merrill spokesperson emphasized that the denial of the injunction “is only the first step in the litigation process,” and confirmed that Merrill plans to pursue the case through a parallel arbitration before FINRA. Merrill stated it remains “confident that a FINRA panel will agree that the defendants engaged in a corporate raid and conspired to poach our employees and clients.”
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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