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Judge rules adviser harmed Morgan Stanley by changing records

The corporate logo of financial firm Morgan Stanley is pictured on a building in San Diego, California September 24, 2013. REUTERS/Mike Blak
The corporate logo of financial firm Morgan Stanley is pictured on a building in San Diego, California September 24, 2013. REUTERS/Mike Blak

By Sam Forgione

NEW YORK (Reuters) - A federal judge ordered a former Morgan Stanley financial adviser to return client information to the firm and prohibited him from soliciting his prior clients because he subverted the firm's ability to reach those clients.

Denis O'Brien, who worked at Morgan Stanley for nine years before his sudden departure for Raymond James Financial on October 25, changed 206 client telephone numbers in the Morgan Stanley contact management system before he left, causing "irreparable harm" to the firm, the decision read.

"O'Brien's deliberate sabotage of Morgan Stanley's client records deprived customers of the right to make an informed decision to either maintain their account at Morgan Stanley or transfer their account to Raymond James," read the decision, published November 6, by Judge Vanessa L. Bryant of the U.S. District Court for the District of Connecticut.

O'Brien could not be reached for comment. His attorney declined to comment, as did a Raymond James spokeswoman.

The court's order that O'Brien surrender all information on his former clients and not solicit them did not apply to the roughly 15 clients who had already followed O'Brien to Raymond James as of November 4, the decision read.

Morgan Stanley sued O'Brien on October 31, claiming that he changed the phone numbers for 156 client accounts on the firm's computerized records, which prevented the firm from promptly reaching O'Brien's clients after he left.

O'Brien took a list of his clients' contact information to solicit them at his new job while leaving a copy of the correct phone numbers with the firm, but Morgan Stanley was initially unaware of the discrepancy between that copy and the altered computerized records, the earlier complaint read.

While the court decided that O'Brien's actions complied with the "technical aspects" of the industry protocol that allows advisers to take client contact information with them to their new firms, it ruled that he violated its "spirit" by changing Morgan Stanley's computerized records.

"We are obviously pleased with the Federal District Court's decision. The Protocol for Broker Recruiting is not intended to shield departing financial advisors who engage in wrongful conduct," Morgan Stanley spokeswoman Christine Jockle said in an email.

(Editing by Linda Stern and Andrew Hay)

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