Raymond James, FAs Sued for Using Pandemic to Unfairly Compete

Posted April 21st, 2020.

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Raymond James and two of its recent advisor hires are facing a lawsuit that accuses the FAs of “using the global pandemic to their advantage to unfairly compete in the marketplace,” among other things.

Regions Bank says in the lawsuit that Michael Montalvo, a former private wealth advisor with the bank, and Mauricio Ricardo Cardenas, a former Regions asset management portfolio manager, “resigned abruptly” from the firm “despite the national state of emergency related to the global pandemic.”

The pair began “improperly” telling clients that they were moving to Raymond James and soliciting to take the customers’ accounts with them, FA-IQ sister publication FundFire writes, citing the complaint filed in a Florida district court last week.

The pair “were essentially working with and for Raymond James, in direct competition with Regions, and in direct contravention of their legal obligations to Regions,” the suit alleges, according to FundFire. Regions says that two accounts serviced by both Montalvo and Cardenas requested transfers less than a week after the pair resigned, and the bank expects a further 12 clients of Montalvo and Cardenas to make similar requests, the publication writes.

Montalvo serviced over 230 client accounts representing more than $204 million while Cardenas serviced client accounts representing roughly $178 million, according to FundFire.

Regions is alleging misappropriation of trade secrets and breach of fiduciary duty and seeking a temporary restraining order against Montalvo and Cardenas and Raymond James.

Spokeswomen for Regions Bank and Raymond James declined comment to FundFire, and a lawyer representing Raymond James, Montalvo and Cardenas didn’t respond to its request for comment. FundFire was unable to reach Montalvo and Cardena for comment. Raymond James separately declined to comment to FA-IQ.

Raymond James is a signatory to the Protocol for Broker Recruiting, the industry accord allowing departing advisors to take some client data with them without the threat of lawsuits, while Regions is not, according to the publication. Charles Field, co-chair of the financial services practice of law firm Sanford Heisler Sharp, tells FundFire that Montalvo and Cardenas likely crossed the line by taking customer data, as it belongs to Regions, and soliciting clients while still at the bank.

By Alex Padalka

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