Merrill Lynch gets injunction against ex-employee

When brokers leave a brokerage and join another, ethically they are expected not to solicit clients they served at their previous job. But that happens all the time. Even behemoths like Merrill Lynch are not too big to be subjected to such post-employment deceit.

The U.S. financial firm had a rude awakening when it found its former employee, Chad Roy Sillman, was making attempts to directly contact his former clients and transfer their business. Merrill took the legal route to permanently prevent Sillman from using information he allegedly culled from the firm’s records.

The FINRA Arbitration Panel partially granted Merrill Lynch’s request for a permanent injunction by preventing Sillman from soliciting former Merrill Lynch clients until October 21, 2012.

The victory is considered only partial, as Sillman remains free of injunction if he wants to make tombstone announcements of his new job at his new employer in the local media.

In the absence of a written agreement and provisions that impose a post-employment non-solicitation and/or non-compete restrictions, it is often found that the resolution of such a dispute revolves more around nuance than substance.

Oftentimes, simply letting clients know of your decision to leave a firm is enough to make them consider following you. After all, not every “communication” between a broker and a client can be construed as “solicitation.”