By George C. Miller, Esq. of Shustak Reynolds & Partners, P.C. posted on Wednesday, February 21, 2018.

George C. Miller

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 105)
Direct: (619) 501-8270
Email: [email protected]

George C. Miller, Esq.
619.696.9500 ext. 105
[email protected]

Just months after exiting The Broker Protocol, UBS Financial Services has reportedly added a broad non-solicitation clause to bonus agreements certain advisors are required to sign before receiving their 2017 production bonuses.  That clause, which is of questionable enforceability in California, purports to prevent departing UBS advisors from soliciting their clients for a period of one year after leaving the firm and claims to give UBS the right to seek injunctive relief and damages in the event of a breach.  

UBS will require employees to sign the revised bonus agreements as a condition of receiving their previously earned bonuses.  Firms often impose these agreements on a “take it or leave it basis” and are unwilling to make exceptions or otherwise negotiate their terms.  The new non-compete language comes as no surprise, as other firms who have recently exited the Protocol, including Morgan Stanley, have imposed similar non-competes on existing employees, many of whom enjoyed the firm assuming the Protocol would apply for the duration of their employment.  Both UBS and Morgan Stanley have recently sought to enforce similar non-compete agreements in court and obtained a series of temporary restraining orders against departing financial advisors preventing those advisors from contacting clients. 

For any financial advisor considering a transition, whether from a wirehouse, independent firm, RIA or hybrid firm, it is critically important to consult with experienced counsel to assess the risk of litigation.  Our California trade secrets, non-compete and broker protocol lawyers have extensive experience counseling financial advisors in transition.

UPDATE:  Over the weekend, facing push back from its advisors, UBS agreed to revise its bonus agreements to remove the non-solicitation language--for now.  In the same announcement, UBS confirmed the next iteration of the agreements (e.g., those for 2018 bonuses) will include a broad non-solicitation clause.  

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. For more information, or if you or your company require counsel in these areas, contact us today for a confidential, complimentary consultation.

Share This Article