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Schwab takes another advisor to court over alleged client solicitation

Charles Schwab advisors contemplating departure should take notice — the brokerage is closely watching for ex-reps reaching out to former clients.

This week, the custodian and brokerage filed a complaint seeking preliminary injunction against ex-Schwab advisor Andy Saeger after he allegedly solicited clients at his new employer in violation of agreements he signed while at Schwab. The brokerage has also initiated a FINRA arbitration against the advisor, according to the complaint filed in a federal court in Wisconsin.

It’s not the first time Schwab has accused departing advisors of client solicitation recently. In July, the San Diego-based brokerage filed legal claims against a 13-year Schwab advisor who left the firm for LPL Financial. In April, Schwab took similar action against a $750 million advisor team for alleged non-solicit violations and not providing adequate resignation notice after it jumped to Morgan Stanley.

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Charles Schwab Corp. signage is displayed outside an office building in New York, U.S., on Thursday, April 12, 2018. Charles Schwab Corp. reported earnings per share for the first quarter that beat the average analyst estimate, with 443,000 new accounts, the highest quarterly level in 18 years, chief executive officer Walt Bettinger said in a statement. Photographer: Christopher Lee/Bloomberg

Saeger — who had been at Schwab for 12 years and left for BMO Harris's wealth management division in November — is being accused of violating confidentiality and non-solicitation agreements by contacting two clients via email and a LinkedIn message, according to the complaint.

“Saeger is reaching out to Schwab clients through other means, including social media, to solicit their business,” the complaint reads.

Saeger did not respond to two requests for comment about the allegations.

Schwab’s confidentiality and non-solicitation agreement, which was included in the filing, prohibits employees from encouraging clients to leave the firm — either while working at the firm or up to 18 months following their own departure. Employees at Schwab also agree to “immediately disconnect from any clients with whom [they are] connected on LinkedIn” once they leave the company. This requirement excludes clients who are family members, relatives or certain individuals disclosed to Schwab before they were hired.

"While we can't comment on [the] particulars of this case, Schwab considers the protection of customer information and confidentiality to be of utmost importance, and expects that its representatives will comply with their contractual and legal obligations concerning customer information. However, if it becomes necessary, Schwab will not hesitate to enforce those obligations in a court or arbitration proceeding," Schwab spokesman Pete Greenley said in a written statement.

A hearing date for the arbitration was not included in the court filing.

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