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Merrill Lynch and Fidelity Face Off in Legal Brawl Over 200 Clients

March 6, 2018

Fidelity is suing Merrill Lynch and a former Fidelity rep who had gone to the wirehouse and allegedly solicited Fidelity clients, InvestmentNews writes.

At stake are around 200 Fidelity client households with more than $528 million, according to the suit cited by the publication. Fidelity wants injunctive relief in federal court in Houston, which the company says it needs to ask for expedited Finra arbitration, InvestmentNews writes.

According to its suit, customers started telling Fidelity that former Fidelity Brokerage Services broker Christopher Corcoran began soliciting them to come over to Merrill Lynch a little over a month after his December resignation from Fidelity, the publication writes. Fidelity says one of its customers gave the firm a copy of a solicitation letter from Corcoran received in the mail, according to court documents cited by InvestmentNews.

Fidelity wants Corcoran and Merrill Lynch to be forced to return all records obtained from Fidelity on the client accounts, according to the publication. Fidelity also wants Corcoran to recreate all customer lists from memory or by using their names to find their information on public sources, InvestmentNews writes.

News of Fidelity’s suit comes at a time when Morgan Stanley and UBS are increasingly aggressive in going after departing brokers.

The two wirehouses, along with Citigroup, have recently withdrawn from the Protocol for Broker Recruiting. But according to the Broker Protocol directory, Fidelity was never a signee to the industry accord that allows departing reps to take some client information with them without threat of a lawsuit.

Merrill Lynch, meanwhile, is facing a separate suit from about 60 former executives who say they collectively lost about $400 million when Merrill Lynch stock plunged in 2007 and 2008 because of the company’s subprime mortgage product exposure, InvestmentNews writes. The former execs are seeking more than $1 billion in Finra arbitration, while Merrill Lynch is seeking preliminary injunctions across the country to block the arbitration, according to the publication.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.