Crt denies Smith Barney restraining order request

FWR Staff

4 October 2007

Citi brokerage failed to show that office manager violated hiring protocol. A Florida district court has turned down Citi Smith Barney 's petition for a temporary restraining order on five former employees who have left to work for UBS.

Smith Barney, the retail brokerage unit of New York-based Citigroup, applied for an order to stop Lane Strumlauf, formerly manager of the brokerage's Plantation, Fla., office, and five producers from that office -- Shaun Orcinolo, Barry Klein, John Kirk and Richard Silverman -- from starting work at UBS Wealth Management.

They all resigned from Smith Barney on 24 August 2007.

Smith Barney and UBS are members of a voluntary pact that sets out ground rules for governs broker defections with a view to cutting down on litigation. Instituted more than three years ago, the so-called Protocol for Broker Recruiting spells out the information that brokers and advisors can take with them when they move from one company to another.

Interpretations

In its petition to the court, Smith Barney said that Strumlauf breached an agreement with the firm by asking his clients to transfer accounts from Smith Barney to UBS. Although advisors can retain their clients' bare contact information under the rules of the protocol, Smith Barney said that Strumlauf transferred "information outside of the authorized information."

In any event, Smith Barney adds, "The protocol doesn't apply to branch managers."

Michael Greco, a Philadelphia-based attorney with the law firm Fisher & Philips, says Smith Barney is mistaken about that. The wirehouse's view "that the protocol doesn't apply to branch managers isn't supported by the language of the protocol," he told Dow Jones earlier this week.

Strumlauf said he didn't keep any client information on Smith Barney clients. And, in response to another point Smith Barney raised in its petition, added that he didn't solicit any of his colleagues to join him at UBS.

The U.S. District Court of the Southern District of Florida didn't grant the restraining order because Smith Barney didn't show that Strumlauf did anything to violate his agreement with the firm.

In addition to Smith Barney and UBS, other signatories to the broker-hiring protocol are Morgan Stanley, Merrill Lynch, Wachovia Securities, A.G. Edwards Raymond James & Associates, SunTrust's Capital Markets unit and Stephens Group. -FWR

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