UBS broker sued by Morgan Stanley agrees to ban customer solicitation

July 21, 2021

An ex-Morgan Stanley broker in Colorado and New Jersey has agreed to an order preventing them from soliciting former clients governed by team agreements, under a mandatory injunction filed in federal court in New Jersey.

The order, in effect pending a parallel hearing on injunction and damages by the financial industry regulator, is in line with what Morgan Stanley put on trial last week over Michael P. Crotty’s transfer of assets to UBS Prevent wealth management. UNITED STATES.

Morgan Stanley, who said Crotty had annual sales of $ 2.75 million with client assets of $ 540 million, did not disclose what portion of his book consisted of joint accounts but filed as evidencing agreements that blacked out Listing names for hundreds of clients shared with former Crotty Group partner Howard Shallcross, who remains with Morgan Stanley.

Crotty, a 26-year-old industry veteran, may still process incoming account transfer requests, service those who have already transferred accounts, and solicit family members, according to the order signed by both parties and approved by a judge on Monday.

Crotty’s attorney Jeffrey I. Wasserman in New Jersey did not respond to a comment. The ruling points out that the provision does not constitute an admission of misconduct.

Morgan Stanley and UBS spokespersons declined to comment. Shallcross, who has 21 years of experience according to BrokerCheck and is based in Shrewsbury, New Jersey, declined to comment.

Morgan Stanley claimed last week that Crotty violated the year-long unsolicited production ban included in the joint production agreements, and also said that he pre-recruited at least four clients, including his largest client, to UBS. Morgan Stanley appeared particularly irritated by Crotty’s filing of reimbursement claims for trips he had made to New Jersey, allegedly soliciting clients about his upcoming move.

Crotty is also required to return to Morgan Stanley, as directed, all of the Company’s confidential information – including account numbers, account information, investment history, risks, management fees, interest rates and profiles – as well as any other information it held upon leaving Morgan Stanley for those of its clients were not disclosed voluntarily after joining UBS.

Crotty, who works primarily from her Boulder office at UBS, also uses Wirehouse’s Manasquan, New Jersey office. According to the company’s complaint, he had offices in Boulder and Shrewsbury, New Jersey, while at Morgan Stanley.

Crotty’s practice was founded by his father nearly six decades ago, according to the broker’s biography on the UBS website. He joined his father at Merrill Lynch in 2000 and took over the helm of the Crotty Group in 2005, according to the biography.

Both UBS and Morgan Stanley withdrew from the broker recruitment protocol in 2017, which allows advisors to save some client contact information when switching to signing companies, and which aims to reduce litigation and recruitment efforts over the past year and a half.

Morgan Stanley prevented a $ 6 million manufacturing team from New Jersey from encouraging its former clients to join them at RBC Wealth Management-US in January last year.

At least two of Morgan Stanley’s own large-team recruits have landed in court in the past few months. A $ 4 million manufacturing team in Garden City, New York, who joined from UBS in April, agreed to prohibit solicitation the following month. In December, a judge issued an injunction against a $ 14 million team in Boca Raton, Florida that had also come from UBS.

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