Fidelity accuses ‘direct competitor’ Morgan Stanley, ex-employee of client solicitation
“Fidelity is not, and has never been, a signatory to the Protocol.”
That’s an excerpt from Fidelity Investments senior branch manager Heath Odom's testimony in court documents. Fidelity is seeking preliminary injunction against “direct competitor” Morgan Stanley and one of its brokers ahead of a FINRA arbitration hearing.
“At least ten” clients reported that ex-Fidelity rep Anthony Guadagnino sent them mailings — some sent to clients by overnight express — in order to solicit them to Morgan Stanley, according to the documents filed in a Florida district court.
The Boston-based retail brokerage is accusing both Morgan Stanley and Guadagnino of misappropriation of trade secrets, unfair competition, tortious interference with existing business relations and unjust enrichment. Fidelity is specifically accusing Guadagnino of breach of fiduciary duty and duty of loyalty and breach of contract, according to the complaint.
Guadagnino, who left Fidelity in June, denies the allegations, according to a letter and affidavit attached to the filing. A Morgan Stanley spokeswoman declined to comment.
“Mr. Guadagnino has not contacted any clients for the purpose of soliciting their business. Mr. Guadagnino has only responded to clients who contacted him, which is not a violation of any sort,” Guadagnino’s attorney, Michael Taaffe, wrote in a letter attached to the filing. Taaffe did not respond to a request for comment. Guadagnino wrote in a filing that he does not possess any records or documents related to clients or prospective clients.
Guadagnino hired Taaffe as an attorney prior to departing the retail brokerage, according to a resignation letter he sent to Odom via email. In the letter, Guadagnino asked his branch manager to tell both his clients and brokers who would acquire his accounts how they could get in touch with him at Morgan Stanley.
“It is my hope that my transfer to Morgan Stanley can be handled in a professional, businesslike manner and that the brokers re-assigned to my accounts at Fidelity do not make inappropriate or disparaging remarks about me to my clients,” he wrote in the letter.
He also noted in the letter that he had left all Fidelity documents behind. “I sincerely hope there will be no issues with my departure and that it can be concluded to the best interest of my clients,” he said.
Fidelity’s Odom insists in his affidavit that Guadagnino was “aggressively” soliciting clients.
“One of the customers even confirmed that the mailing was not just a generic notification, but included a personal letter from Gaudagnino that talked about the customer transferring his accounts and included a second page with instructions on how to transfer the accounts,” Odom wrote. The same customer indicated they had no indication of moving the accounts.
Fidelity is not the only brokerage to go after reps for reaching out to clients following a departure. Schwab is known to seek preliminary injunctions against advisors it says solicited clients. Morgan Stanley itself frequently files lawsuits against brokers that leave the firm.
A Fidelity spokeswoman declined to comment.