Lawsuit over $5.5B star adviser team's departure settled

A lawsuit filed by Deutsche Bank Alex. Brown against a team of top-producing brokers who are leaving the firm for Barclays Wealth Management has been settled.
APR 29, 2010
A lawsuit filed by Deutsche Bank Alex. Brown against a team of top-producing brokers who are leaving the firm for Barclays Wealth Management has been settled. Deutsche had sued the brokers — Scott Zelnick, Padraig McBrien and Heidi Guldbrandsen — after they left the firm earlier this month to join Barclays. The team reportedly produced revenues of $15 million on a $5.5 billion asset base. (Their exit from Deutsche registers as the largest move made by a single team from one shop to another this year.) The dispute, however, "has been amicably resolved to the satisfaction of all the parties," Barclays spokeswoman Monique Wise, said in a statement. Ms. Wise declined to comment further. The brokers were not available for comment. Deutsche spokeswoman Mayura Hooper confirmed the settlement. She declined further comment. In an unusual twist in the case, the team was ordered by a New York court a week ago to return to Deutsche for 60 days. New York State Supreme Court Justice Bernard Fried said the brokers' agreements with Deutsche required them to give 60 days' notice before resigning. The brokers were ordered "to return to Deutsche Bank immediately to be able to service their clients," according to the order issued by Judge Fried. "That's not a good situation," said Danny Sarch, founder of Leitner Sarch Consultants, Ltd., a recruitment firm. The brokers were put in the difficult position of working at Deutsche while presumably being unable to tell clients about their pending departure, he said. "They didn't have their ID's [anymore] and couldn't get in the building" when they returned this week, said Mr. Sarch, who was not involved in recruiting the team. The 60-day notice requirement is similar to a so-called "garden leave" provision, which requires an individual to take paid time off before joining a competitor. But garden leaves are usually reserved for non-producing executives, Mr. Sarch said. (Read Mr. Sarch's blog posting on garden leave policies) For institutional brokers, a garden leave "makes some sense," said David Gehn, a member of Gusrae Kaplan Bruno & Nusbaum PLLC, who was not involved in the case. "If I [as the firm] introduce you to our institutional client base, I may want … some protection when you leave," he said. The court order allowed the Deutsche team to solicit clients they brought with them from their prior firm. The brokers came to Deutsche Bank Alex. Brown from Lehman Brothers Holdings Inc. in 2002, according to their registration records.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.