Archive for the ‘Non-Solicitation & Non-Competition’ Category
When it comes to financial advisers switching firms, the old adage – loose lips sink ships – holds true.
When a financial adviser is plotting to jump ship, the temptation to tell clients is often strong. Stifle it, and stay mum.
New firms often don’t appreciate being drawn into lawsuits or arbitration over solicitation. Clients don’t like it, either.
“You’re also potentially subjecting your clients to be asked to testify as to the nature and scope of your communications,” said David Harmon, an employment attorney and partner at Norris McLaughlin & Marcus in New York. “If you want to keep yourself out of trouble, you don’t inform clients.”
For full article, click here to go to the Wealth Management Journal for the Wall Street Journal.
In the arena of post-employment non-solicitation/confidentiality litigation, employers and employees should be aware of a November 15, 2012 decision by the First Department of the Appellate Division of the Supreme Court of New York in AllianceBernstein LP v. Atha. In this case, Atha, a financial analyst who left AllianceBernstein (AB) for Morgan Stanley, was sued by AB, claiming he violated the confidentiality provisions of his employment agreement by taking confidential information, including client lists, to Morgan Stanley for the purpose of soliciting those clients. As part of its action for a TRO, AB sought and the lower court ordered that defendant turn over his iPhone to determine the scope of confidential information retained by Atha. The Appellate Division reversed holding that “[t]he iPhone would disclose irrelevant information that might include privileged communications or confidential information.” Notwithstanding, the court’s decision, it still ordered the defendant to provide his iPhone for an in camera or in court review to “ensure that only relevant, non-privileged information will be disclosed …” (quotes from the decision of the Appellate Division, First Department).
In addition to the potential violations of confidentiality and non-disparagement provisions contemplated by a “tell-all” book about Goldman Sachs, Greg Smith should also consider garden leave and/or non- competition/non-solicitation restrictions. If Smith had a new job lined up before resigning, did he make the new employer aware of the restrictions to which he was bound? If these post-employment restrictions are reasonable in scope and duration, and protect Goldman’s legitimate interests, Smith (and possibly his new employer) will need to be mindful of not overstepping the boundaries of the restrictions.