Wells Fargo Ties $2,000 Bonus to Non-Solicitation Clause, Raising Advisor Concerns
From the desk of Jim Eccleston at Eccleston Law
Wells Fargo & Co. recently issued a $2,000 bank-wide award to its 215,000 employees, following the Federal Reserve’s June decision to lift its asset growth restrictions. AdvisorHub reports that most of the award was distributed as restricted stock grants and came with an 18-page agreement employees had to sign to receive it.
Buried in the fine print is a one-year non-solicitation provision that also applies to financial advisors. While some advisors already had non-solicitation terms in their employment agreements, those provisions have historically been superseded by the Protocol for Broker Recruiting, which allows advisors to take certain client contact information and solicit clients when moving between member firms.
According to AdvisorHub, Wells Fargo confirmed it has no plans to leave the Protocol and will not enforce the new non-solicitation provisions if departing advisors join another Protocol firm and comply with its terms. Still, the inclusion of the language has raised concerns among some financial advisors, and lawyers like Eccleston Law LLC who represent those advisors.
Although Wells Fargo has not been as aggressive as some other firms in enforcing client non-solicitation agreements, the firm has litigated such issues. For example, Wells Fargo recently lost a court bid to restrain a terminated Illinois broker accused of violating team and inherited account agreements containing non-solicitation restrictions.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, wells fargo
