Morgan Stanley: Advisor Who Left for Raymond James Solicited Another Rep's Clients

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Morgan Stanley has accused financial advisor Nicholas Takahashi of breaching his contractual obligations and duty of loyalty after he left for Raymond James, contending he has improperly used confidential information to unlawfully solicit firm clients with hundreds of millions of dollars in assets — including some who were serviced by another advisor.

Takahashi left in May with his team, which comprised six other advisors. They had managed $1.3 billion in assets at Morgan Stanley, Raymond James said in June in a statement welcoming them to the firm.

In a complaint filed last week in U.S. District Court in Nevada, Morgan Stanley seeks a temporary restraining order and preliminary injunction to enforce the confidentiality and non-solicitation obligations in Takahashi’s employment agreement with the firm, pending a Financial Industry Regulatory Authority arbitration.

Takahashi “has not only retained confidential client information despite multiple demands from Morgan Stanley, but he is actively using this information to target clients he never serviced during his employment,” the complaint alleges.

“Furthermore, (he) has revealed detailed information to these clients concerning their accounts at Morgan Stanley — data he had no legitimate purpose to access during his employment with Morgan Stanley,” it says.

The advisor, who had been with Morgan Stanley for 11 years, agreed when he signed on in 2013 that all client information was the firm’s exclusive property, that he would use such information only on the firm’s behalf, and that he wouldn’t solicit Morgan Stanley clients for a year after his employment there ended, according to the complaint.

In September, Morgan Stanley learned Takahashi or team members under his direction “were soliciting Morgan Stanley clients with whom they had no personal interaction whatsoever during their employment with Morgan Stanley,” the suit contends.

“These clients represent hundreds of millions of dollars in client assets under Morgan Stanley management and well over $1 million in annual gross revenue to Morgan Stanley,” and are exclusively serviced by Morgan Stanley advisor Steve Kleinertz, it says.

While at Morgan Stanley, Takahashi and his team had entered into joint production arrangements with Kleinertz that encompassed all clients the advisors serviced, as the firm encourages its advisors to do for succession planning, according to the suit.

When Takahashi left the firm, however, he and Kleinertz hadn’t integrated their clients or services, it says, adding that it was inconceivable that Takahashi and his team members would have knowledge of Kleinertz’s clients “and their highly sensitive information without having accessed confidential client lists and records that were not related to their job responsibilities for Morgan Stanley, and unlawfully have taken such information to their new firm.”

Some Morgan Stanley clients who had never heard of Takahashi have acknowledged that a Takahashi team member “knew specific details concerning their accounts with Morgan Stanley such as the amount of assets invested with Morgan Stanley, fee structure, liquid net worth, total net worth,” the complaint alleges.

“To make matters worse, while soliciting Morgan Stanley clients and using confidential Morgan Stanley client information, (Takahashi’s team member, at his direction) has been disparaging Morgan Stanley and Mr. Kleinertz,” Morgan Stanley alleges.

While soliciting Morgan Stanley clients to move their business to Takahashi at Raymond James, the team member has told them the person responsible for managing their portfolio is no longer at Morgan Stanley and the investment is no longer being actively managed, the complaint alleges.

“These fear tactics are totally false. Of course, Mr. Kleinertz remains employed by Morgan Stanley and continues to service their accounts,” the complaint says.

Takahashi’s lawyer denied the allegations in an October letter while “falsely claiming” that the advisor or his team members had personally interacted with Kleinertz’s exclusive clients, according to the suit.

Takahashi didn’t respond to an email seeking comment on the dispute.

Photo: ROMAN/Adobe Stock