December 10, 2010 / 3:14 PM / 9 years ago

Judge halts ex-U.S. Trust team from using client info

NEW YORK (Reuters) - Todd Thomson’s drive to start a new wealth management firm hit a bump after a New York state judge temporarily blocked a team of former U.S. Trust advisers from using client records they brought to his new firm, Dynasty Financial Partners.

Michael Brown, a U.S. Trust adviser with $5.9 billion in assets, and three others joined Dynasty this week to help Thomson build a firm that will provide technology and other support to high-end investment advisers.

U.S. Trust parent Bank of America said in a complaint filed on Thursday that the employees essentially stole trade secrets when they took client records with them from the bank.

Judge Melvin Schweitzer of New York state court in Manhattan said in an order late on Thursday that the employees temporarily may not use or disclose customer lists, other property or trade secrets taken from U.S. Trust.

Brown and his team can, however, continue to advise clients who want to work with them.

The order also directs the employees to return customer lists and other property pending a hearing now scheduled for January 14. A Bank of America spokesman provided a copy of the order to Reuters.

Bank of America in its complaint said neither U.S. Trust nor the bank signed a voluntary industry agreement known as “the protocol,” which provides a framework for recruiting. The pact has helped reduce lawsuits over broker departures.

Merrill Lynch, also part of Bank of America, is a party to the protocol.

Brown and his team in their resignation letter contended the protocol allowed them to take client information, according to Bank of America’s complaint.

Dynasty was founded by Thomson and Shirl Penney, two former Citigroup wealth management executives. Thomson, also a former chief financial officer at Citi, left the bank in 2007 after he was accused by then Chief Executive Officer Charles “Chuck” Prince of improper use of company aircraft.

Officials at Dynasty could not be reached immediately for comment.

Reporting by Joseph A. Giannone; Editing by Lisa Von Ahn

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