Wells Fargo sues $300M breakaway team over client data issues

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Wells Fargo is suing a team of brokers who jumped to Kestra Private Wealth Services after receiving a client complaint that her personal information, including Social Security and account numbers, had been taken without her authorization.

Wells Fargo says that the former wirehouse advsiors took more data than allowed under the Broker Protocol, an industrywide agreement that permits brokers changing employers to take basic client contact information with them. Both Wells Fargo and Kestra are members of the protocol.

Team members Nancy Hurst, Steven Battel, Bruce Battel and Robert Yevchak left Wells Fargo in April to form an independent practice, Liberty Wealth Solutions, in Paramus, New Jersey. The group managed $300 million, according to a press announcement from Kestra.

A Wells Fargo spokeswoman said the company does not comment on pending legal matters. A spokeswoman for Kestra, which is not a named party in the suit, also declined to comment. The Liberty Wealth Solutions team also did not provide comment.

In mid-May, a client contacted Wells Fargo, saying FedEx delivered a package from Hurst soliciting her to transfer her assets to the team's new independent firm, according to Wells Fargo's lawsuit.

The client, who was allegedly not in contact with the team following their departure, saw that her "personal and financial information” had already been “populated in the document fields, leading her to question how Hurst had obtained her personal and financial information," according to Wells Fargo.

The former Wells Fargo brokers "would only have possessed [the data] after their resignation if they had removed it from Wells Fargo Advisors," the bank alleges.

The FedEx package also included a letter from the team explaining their reasons for leaving Wells Fargo.

"We were tired of the constant bad publicity and negative environment Wells had created and thought there had to be a better place for us and our clients moving forward," the document reads, which was included by Wells Fargo in the firm's court filings.

The letter further explains that the team is partnering with Kestra for compliance and technology services and Fidelity and NFS for custodial services.

In its lawsuit, Wells Fargo accuses the brokers of stealing trade secrets, engaging in unfair competition and breaching contract and fiduciary duty. The bank is seeking injunctive relief and is also pursuing a parallel action in FINRA arbitration, according to court documents.

However, the firm's bid for a temporary restraining order against the team was denied on May 31 by U.S. District Judge John Michael Vazquez. The judge also ruled that the Liberty Wealth Solutions team has until June 15 to file a response to Wells Fargo's request for a preliminary injunction. Judge Vazquez will hear oral arguments on June 22.

Other big brokerages such as Morgan Stanley have recently filed several lawsuits seeking to block former advisors from contacting their clients at the firm. However, unlike Wells Fargo, those firms are not members of the Broker Protocol.

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Lawsuits Broker Protocol Going independent Independent BDs Wirehouse advisors Wirehouses Wells Fargo Wells Fargo Advisors Kestra Financial Kestra Private Wealth Services