Non-compete

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May 8, 2009 12:26 pm

A friend signed a 1 year non-compete, unknowingly.  At large wire went indie.  He got a letter from law firm with copy of 1 year non compete and accusing him of copying  client files, etc.  Will they come after him???   he did 300m   20m  assets

May 8, 2009 1:11 pm

I believe him.

May 8, 2009 1:50 pm

Your "friend" is screwed..

May 8, 2009 1:52 pm

Hold on... "your friend" did $300K and $20Mil in assets in less than one year?

 
"Unknowingly" or "Apparently" like that other guy who posted.. How do you people not know what you sign..
May 8, 2009 9:15 pm

No.  300m at wire prev year. moving 20 m in assets to indie

May 9, 2009 9:02 am

1 year non-compete must be pretty standard, my friend just left a large wire and found his non-compete agreement that said 1 year. However, I have never known anyone to switch firms and not go after their clients right away. Then it seems up to the firm you left if they will come after you and try to shut you down for a few months or extract money from the firm you went to.



It's probably automatic that the firm you left will send you the non-compete form you signed, but less likely they will pursue a TRO unless they have evidence you took information you wern't suppose to take like SS#, DOB, Account #s. If you just take your client's contact information like address, phone number I don't think they have much of a case. Also, the big wire is less likely to bother the lower the amount of assets at risk, but I don't know what that threshhold would be-maybe more like 50M. Hopefully, you have some legal support at your indie.

Why do they think copies of client files etc. were taken?

May 9, 2009 10:23 am

Is it a non-compete, or is he supposed to just not contact his former clients for a year? There is a BIG difference.

May 9, 2009 10:51 am

B24 is right.. cause the noncompete is tough.. the non-solicit is crap..

May 9, 2009 4:59 pm

He says it is a non solicit for one year.  They are accusing him of: Prior to your departure from firm you were witnessed initiating a large number of customer printouts.  These customer printouts are unaccounted for and are believed to have been improperly removed by you.


Accordingly, demand is hereby made for your compliance with the terms of your Agreement and the immediate retrn to your former firm branch office of any and all firm customer information removed or retained by you in any form.
 
(He says that he did print out some, but decided to not take (got scared) and left eveything in the office.?????
What should he do?????  tks for advice all
May 9, 2009 5:00 pm

He says it is a non solicit for one year.  They are accusing him of: Prior to your departure from firm you were witnessed initiating a large number of customer printouts.  These customer printouts are unaccounted for and are believed to have been improperly removed by you.


Accordingly, demand is hereby made for your compliance with the terms of your Agreement and the immediate retrn to your former firm branch office of any and all firm customer information removed or retained by you in any form.
 
(He says that he did print out some, but decided to not take (got scared) and left eveything in the office.?????
What should he do?????  tks for advice all
May 9, 2009 5:30 pm

I would tell your "friend" to consult an attorney or pay the $15k.

May 14, 2009 9:25 am
rrbdlawyer:

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Your friend must not be honoring your friendship because I find it hard to believe that any registered rep would not immediately notice the inclusion or addition of a Non-Compete in any formal document requiring a signature. That restriction could destroy an RR's career and no one would lightly enter into such an undertaking. Your recitation of some alleged conversation he had with his wirehouse is somewhat silly as most professionals know that if something isn't in writing that it will only come back to haunt you.  The expression is that an oral contract is worth the paper it is written on.

 
Nonetheless, your friend has apparently told you that he got a threatening letter about something that he appears to not think that he did.  As such, it doesn't appear that there is anything for him to do because no Complaint or Statement of Claim has been served on him. Moreover, the firm can't simply march into court or arbitration and win its case by claiming that X is missing and we think Reggie Repp took it but we have no proof, and he says he didn't. There is a burden of proof that must be met in such matters.
 
Tell your friend to stop playing amateur hour and risking his career.  This is like quicksand. If he's going to play a lawyer then he's only going to get himself in deeper if there is serious trouble looming. He can easily find a lawyer to talk to him for a few hundred dollars.  It would be money well spent if he is distressed by the allegation.  Otherwise, he may as well wait to see if any formal action is taken by the former employer and hire a lawyer at that point -- belatedly but at least a fall-back position.



Even with a non-compete, if advisors were to follow the Protocol is that not a good start.  I read recently that the courts have held up the Protocol as a standard practice in the industry even when a firm did not belong to the Protocol.  Of course any advisor should seek the help of an attorney, but just seem to me that if you follow the Protocol it makes the attorney's job a lot easier.

ash

May 25, 2009 9:28 pm

For anyone who has gone from a protocol firm to a non protocol firm.....



How did you resign? Did you follow the protocol? Did you hand in a list
of client info you were taking? What did you put in your resignation
letter?

I have been advised, in this situation to simply hand in a one sentence resignation letter, stating that i am resigning effective immediately, and not give any lists etc, or anything else. Just walk in with my keys and cellphone in hand, along with the letter, and be out of there quick.