Recruiting protocol carve out by Merrill Lynch raises questions

Bank of America/Merrill Lynch & Co. is carving out some of its private-banking units from the broker recruiting protocol. In a letter sent to protocol signatories on Monday, the firm said that advisers working for the U.S. Trust, Bank of America Private Wealth Management unit were not covered under the pact. Also not covered are "wealth management bankers" who work for Bank of America NA or Merrill Lynch Pierce Fenner & Smith Inc. Merrill spokesman William Halldin confirmed that the firm sent the letter, but declined further comment. "I don't see how [Merrill] can say some [employees] are not subject to the protocol," said attorney Patrick Burns, who represents brokers in employment matters. Mr. Burns said he's unaware of any other firm that has carved out certain employees. The move by Merrill appears to be an effort to cover its private bankers, he added. Mr. Burns expects a Merrill private banker to challenge the carveout at some point, but was not personally aware of such a situation. In October, BofA's former broker-dealer, Banc of America Investment Services Inc., was merged into the Merrill broker-dealer. As a result, unlike their private-banker colleagues, BAIS bank brokers for the first time were covered under the protocol. That development led to some speculation that BAIS representatives might be tempted to jump ship for some fat recruiting deals. (See story.) The recruiting protocol is a voluntary agreement between firms that allows advisers to take basic customer contact information without the threat of litigation.