The wirehouse had claimed in a lawsuit last month that David James Sayler pre-solicited clients via mass-mailed thank-you cards for several weeks before his resignation.
Judge Ann Aiken of the U.S. District Court in the District of Oregon granted Morgan Stanley’s TRO request only a day after the firm submitted it. At the time, Aiken ordered Sayler to stop soliciting clients and return documents and client data he may have removed from the firm.
But last week, Aiken refused to extend the TRO, arguing that Morgan Stanley didn’t prove that Sayler’s use of allegedly proprietary data would cause the wirehouse “irreparable harm,” AdvisorHub writes.
“If Sayler is found to have violated the 2017 and 2019 Agreements by soliciting covered client accounts, the loss to Morgan Stanley is likely more financial than reputational,” Aiken wrote, according to the industry news website. “Such harms can be redressed by damages … and are not, therefore, irreparable.”
Aiken’s decision appears to be the first time a judge has reversed their previous order in over a dozen suits filed by Morgan Stanley since it dropped out of the Protocol for Broker Recruiting in 2017, AdvisorHub writes.
Typically, courts let TROs stay in effect until a Finra arbitration panel makes a ruling, Thomas Lewis, a securities employment lawyer at Stevens & Lee in Princeton, N.J., tells the website.
But it doesn’t mean Sayler has won the case, Lewis tells AdvisorHub.
Sayler could technically solicit former clients with the lifting of the TRO, but doing so could increase any potential damages awarded to Morgan Stanley if it wins in arbitration, according to Lewis, the website writes.
A Morgan Stanley spokeswoman declined comment to AdvisorHub on the termination of the restraining order or on its arbitration claim.