It seemed like a typical dispute between a company and a former employee: Toronto-Dominion Bank sued wealth adviser Gregg Desmarais last month, claiming he and a colleague “abruptly” resigned and violated their contracts by luring away clients with millions of dollars of assets to competitor Raymond James Financial Inc.
But Toronto-Dominion told an entirely different story when it reported his departure to regulators in April: Desmarais voluntarily quit after the bank opened an internal review over suspected violations of anti-money-laundering policies, according to a disclosure the Canadian banking giant filed with the Financial Industry Regulatory Authority.
The notice came as Toronto-Dominion is under investigation by the US Department of Justice, bank regulators and the Treasury Department over allegations that it failed to catch money laundering and other financial crimes at several of its US branches. The lender has said it’s in the midst of a “comprehensive overhaul” of its anti-money-laundering program.
Toronto-Dominion declined to comment on the lawsuit against Desmarais, citing the ongoing legal proceedings. The internal review cited on his Finra profile “is not related to the bank’s broader AML investigation,” spokesperson Lisa Hodgins said.
She said the investigation disclosed to Finra was not concluded before Desmarais left the bank and that it is unrelated to the non-solicitation lawsuit, which doesn’t mention anti-money-laundering issues.
“Mr. Desmarais denies TD’s baseless allegations,” Michael Roche, a lawyer representing Desmarais in the lawsuit, said by email. “I would also like to note that TD’s lawsuit against my client has nothing to do with TD’s AML issues.”
Representatives for Raymond James had no immediate comment.
Desmarais “abruptly resigned” and terminated his registration with the bank on April 25, according to Toronto-Dominion’s complaint, filed with the US District Court in Connecticut. The case has yet to be heard on its merits, but there is a temporary restraining order in place barring Desmarais from soliciting additional clients of his former firm.
His Finra profile, under the category of “employment separation after allegations,” says: “An internal review was initiated of the Representative’s actions based on the suspected violation of firm Anti-Money Laundering (AML) policy by the Representative.”
That type of disclosure event relates to situations where a broker voluntarily resigns, is fired or was permitted to resign after being accused of violating investment-related laws, rules or standards; fraud or the wrongful taking of property; or failure to supervise in connection with investment-related requirements, according to Finra.
Desmarais’s termination type is listed as “voluntary resignation” on April 24 and the product type involved is described as “banking products” other than certificates of deposit.
Finra’s publicly available database, known as BrokerCheck, is intended to help investors make decisions about the advisers and firms they work with.
But the regulator also notes that disclosures posted on the website “may be pending or involve allegations that are contested and have not been resolved or proven.” It cautions that issues may ultimately be withdrawn, dismissed, resolved in favor of the broker or end in a negotiated settlement, “with no admission or finding of wrongdoing.”
Most firms place a limit on advisors’ sales of alternative investments to clients in the neighborhood of 10% a customer’s net worth.
Those jumping ship include women advisors and breakaways.
Firms in New York and Arizona are the latest additions to the mega-RIA.
The agent, Todd Bernstein, 67, has been charged with four counts of insurance fraud linked to allegedly switching clients from one set of annuities to another.
“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State,” Justice Peter Moulton wrote, while Trump will face limits in his ability to do business in New York.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
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.
