UBS Quits the Broker Protocol

It looks like the Protocol for Broker Recruiting,  the agreement which put an end to expensive suits between brokers and firms, is falling apart. Having represented firms and brokers in those injunctive actions, and in the ensuing arbitrators, I know first hand that those suits are expensive, and very often, a waste of time and money.

Which is part of the reason that the Broker Recruiting Protocol was created. A copy of the Protocol is available on line, but in essence, the wire houses agreed that subject to certain limitations, a broker could leave a firm and contact his clients. That agreement removed most litigation from the broker transition process, to the benefit of firms, brokers, and most importantly, clients. After its creation in

However, last month, Morgan Stanley announced it was withdrawing from the protocol. Today, just a few hours ago, UBS announced that it is withdrawing as well.

In the announcement, the firm claimed that its priority was for current advisers to increase productivity and not recruiting adviser from its competitors.

Morgan Stanley made a similar claim, but that response only tells part of the story. If UBS is to be believed, it is going to cut back on recruiting, and therefore is not as concerned about being sued for recruiting a broker from another firm. However, the reality is that by leaving the PRotocol, UBS and Morgan Stanley are making it harder for their brokers to leave. It has little to do with UBS cutting back on recruiting. Without the Protocol,  there is nothing to stop UBS or Morgan Stanley from suing a broker who leaves,  and tying him up in litigation while he tries to change firms.

It will be interesting to see how this shakes out down the road. It seems to me that a broker who moved to UBS or Morgan Stanley has an argument that he went there relying on the representation that the firm was part of the Protocol, knowing that he would not have a litigation issue should he decide to leave.

We will see how that plays out.

Morgan Stanley Sweetens Recruiting Deals

 According to On Wall Street after overhauling its recruiting deals in light of new regulatory guidance on the fiduciary rule, Morgan Stanley is again tweaking its transition package for elite brokers.

The wirehouse is sweetening the deal for advisers in the top quintile, offering up to 175% of a broker's 12-month trailing production to move, according to two people familiar with the matter.

However, there is no back end - because of the fiduciary rule.

Morgan Stanley sweetens recruiting deals | On Wall Street

Related articles

• Raymond James Sets Recruiting Record: $3B Team 

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The attorneys at Sallah Astarita & Cox have decades of experience in recruiting and broker transition matters, having negotiated packages and separation agreements with every major broker-dealer. To speak to one of their partners, call 212-509-6544.

FINRA's Broker Recruiting Rules Explained - By FINRA

It was a silly rule, designed to address a problem that did not exist and that was gutted before adoption.



It should have been canned entirely, and what is left is another meaningless regulation



Frequently Asked Questions Regarding FINRA Rule 2273 | FINRA.org: