Merrill's Agreement to Protocol for Broker Recruiting Harms Its Efforts to Obtain Customer Solicitation TRO

Merrill Lynch, and other firms such as Salomon Smith Barney, UBS Financial Services and Raymond James, has agreed not to sue each other when brokers move among such firms and seek to transfer their customer accounts, in what is called the Protocol for Broker Recruiting.

In what may be an unintended consequence of Merrill's agreement, a non-signatory to the Protocol defeated Merrill's request for a Temporary Restraining Order (TRO) and injunction to solicit and to transfer customer accounts.

Merrill's typical arguments - like unfair competition, trade secrets and proprietary information, and "irreparable injury" - all were rejected. The court stated that the Protocol "shows Merrill Lynch's contemplation of and approval of the actions alleged."

While the first court opinion to ground some of its reasoning on the Protocol, other courts have denied Merrill's (and other firms') injunction requests due to "unclean hands", arising from the fact that the action complained about is the very action engaged in when those firms are on the receiving end of broker moves and customer account transfers.