Last week I wrote about Judge William Griesbach’s opinion and order in Smith Barney, Inc. v. Darling, et al. 


The Court considered the implications of the  protocol for broker recruiting, to which Smith Barney is a signatory:


Under the Protocol, these financial institutions have agreed that, if a financial advisor leaves one signatory or financial institution to join another signatory institution, the latter will have no monetary liability to the former if the departed financial advisor follows the terms of the Protocol and the new firm does not engage in “raiding.” The Protocol permits a financial advisor to leave one firm to join another and the departing financial advisor can take his or her client information including the address, telephone number, email address, and account title of their prior customers. They can also begin immediately to solicit their clients when they join a new firm as long as they do not do so before leaving.


The Protocol allows a broker moving from a Protocol Firm to another Protocol Firm (i.e., Smith Barney to Merrill Lynch etc.) to solicit their former clients while the previous employer will try to keep their business – also known as competition. 


Robert W. Baird & Co. (the new employer in the Smith Barney case), is not a signatory to the Protocol.  Nevertheless, it argued that Smith Barney’s entry into the Protocol is a concession that former employees soliciting their former clients will not cause irreparable harm (a required element for a temporary restraining order). 


The Court seemed to believe there was some merit to this argument.  Though Smith Barney will likely continue with their lawsuit, it failed to obtain relief from the Court at the most critical time juncture, when the departing advisor is trying to move his business to his new employer.