BofA Merrill sues ex-advisers over alleged dirty tricks
Bank of America Merrill Lynch is suing three former wealth advisers in the US, who it claims used confidential information to lure its clients to a smaller boutique, as large banks battle to fend off competition from a wave of new start-ups and keep hold of their top staff and customers.
The Bank of America Merrill Lynch complaint alleges that the advisers violated their employment agreements by taking “confidential information of hundreds of Merrill Lynch accounts” worth $130m (€92.7m), and which generated $563,000 in commissions for the bank over the past year, according to Bloomberg.
The advisers - Peter Weitz, Steven Weitz and Eugene Morgia - worked at Merrill Lynch's Florida office until last month before joining wealth boutique Fusion Analytics Investment Partners.
The legal claim, which was filed in the federal court in Ft Lauderdale in Florida yesterday, alleges that “in an effort to convince customers to transfer their accounts from Merrill Lynch to Fusion, defendants put in place a scheme laced with deception designed to mislead customers".
The complaint also accuses the trio of establishing accounts at a unit of Merrill Lynch to provide customers with a one-page form that misled them to believe their accounts would remain at the bank while they were transferred to Fusion.
Bank of America Merrill Lynch was not immediately available for comment on the case - Merrill Lynch v Weitz, 09-60871. Fusion Analytics Investment Partners was not immediately available for comment. This legal suit comes as large wealth managers with weakened balance sheets face stiff competition for their most talented advisers from smaller boutiques and multi-family offices. Independent start-ups are also finding it easier to compete for business with larger rivals that have been damaged by the poor performance of some of their products during the credit crisis.
The former head of UBS' UK wealth management arm David Scott, who left the Swiss firm a year ago to set up Vestra Wealth, said this month that the firm had built funds under management of £600m (€684m) in its first year.
This success is even more remarkable given that Vestra was hamstrung by legal action against it from UBS, which tried to prevent Scott from taking former colleagues when he quit the bank. The case was settled out of court last October when the start-up wealth manager apparently agreed not to approach any of its employees or clients for a period of several months.
--write to dcowie@efinancialnews.com
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