Lawsuits

Financial Planning's AI Readiness Survey found that advisors are already using AI for creating legal document summaries and seeing results, but legal experts warn that undisclosed, unmonitored use could open firms up to liability.

Former Morgan Stanley broker Kathy Frazier sued the firm in 2015 and was later joined by six other Black plaintiffs who also alleged they had been systematically excluded from the best advisory teams and client leads.

Francisco Gil tried to claim his status as an independent contractor entitled him to tax deductions for travel, meals and marketing expenses. The IRS and a federal judge said he was in fact an employee.

Merrill had sought a temporary restraining order to prevent members of a large Atlanta-based team who left last week from soliciting former clients for their new firm.

UBS contends a group of advisors who left this month to form an RIA inherited most of their clients from retired advisors who were counting on being paid from their former books of business.

Also this month in our disciplinary digest, a now-barred 'problem broker' for Stifel lands his former firm another hefty settlement, and an advisor is accused of fraud for trying to poach clients from his old firm.

In a lengthy court reply, advisors who left Merrill this week to form an RIA with Dynasty Financial Partners accuse Merrill of "bad faith" for putting them on administrative leave and failing to reinvest in their business.

Merrill accuses industry rivals of conspiring with a group of former employees to remove confidential client information and trade secrets for the formation of a new RIA.

Attorneys and other compliance experts say it's important that financial advisors greet any type of negative feedback with a thoughtful response — especially if it could turn into a legal matter.

In its third suit in as many months, JPMorgan is accusing a former advisor of using its banking referrals to build a book of business and then trying to abscond with those clients to a rival firm.