Advisers at broker-dealers typically think of their clients as their very own, but the legal reality is that they’re clients of the broker-dealer. It’s not difficult to see how this misperception might lead to lawsuits when an adviser leaves, and wants to take clients along.
In the early 2000s, litigation related to broker-dealer personnel moves — and perceived client poaching — reached such a fever pitch that several of the major wirehouses of the time, Smith Barney, Merrill Lynch and UBS, executed the Protocol for Broker Recruiting. This agreement stipulated the terms under which a broker could depart a BD and take limited client information, without spurring the litigation and temporary restraining orders that were common at the time.
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