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Memory Maven, Moving on to New Meal Ticket, Miffs Ex-Employer With Calls to Clients: Fidelity Brokerage Services LLC v. Rocine
Posted on Categories Business & Employment, Court DecisionsTags , ,

By Paul J. Dubow

*A broker takes confidential information even if he does not take written material but instead uses his memory. **A brokerage firm suffers irreparable harm if its customers believe that its confidentiality procedures have been violated when they are called by a broker who is now with a different firm. ***A broker who leaves a firm may send a written announcement to customers advising them of the broker’s new employment, provided that the announcement does not contain a solicitation.

Fidelity Brokerage Services LLC vs. Rocine, No. 17-4993 (N.D. Cal., 9/7/17).

Fidelity and Confidentiality

When Brett Rocine joined Fidelity Brokerage Services in October 2014, he signed an agreement wherein he agreed to keep customer information confidential and not to take such information with him should he leave Fidelity for a competitor. Unlike most brokerage firms, Fidelity does not allow its brokers to make cold calls. Instead, it supplies them with leads that consist of individuals who have previously contacted Fidelity. In July 2017, Rocine resigned from Fidelity and joined JP Morgan Securities. Shortly thereafter, Fidelity learned that Rocine was contacting Fidelity customers in apparent violation of his agreement with it. It filed suit in federal court, seeking a preliminary injunction against Rocine and JP Morgan to bar them from soliciting Fidelity customers pending the completion of a FINRA arbitration between the parties.

A preliminary injunction is granted only if the plaintiff shows that there would be likelihood of success in the underlying litigation, that it would suffer irreparable harm if the injunction were not granted, that the balance of the equities lay in plaintiff’s favor, and that the injunction would be in the public interest. Fidelity argues that it is likely to succeed at the arbitration because it is obvious that Rocine used Fidelity’s customer list to contact the clients. Rocine argues that he took no information from Fidelity, but instead jotted down the names of 25-30 of his 1000 clients from memory and used the JP Morgan database or publicly available databases to obtain their contact information.

No Thanks for the Memories

The Court finds Rocine’s argument to be disingenuous, at best. The fact remains that he would not have known whose name to look up had he not first obtained the names during the course of his employment at Fidelity. Fidelity has also shown the likelihood of significant irreparable harm if Rocine is not enjoined from using its client confidential information, at least until the merits of Fidelity's claim have been resolved in the FINRA arbitration. If Rocine continues to pursue business from his former Fidelity clients, Fidelity will suffer harm to its reputation if it is perceived to have violated or allowed the violation of its clients' confidential contact information. With respect to the balancing of the equities and whether the injunction would be in the public interest, Rocine argues that issuance of an injunction would be "significantly injurious" to the public, because he has clients who wish to continue to do business with him. He contends that the clear public interest in allowing individuals to continue to receive services of their established and trusted investment advisor mandates denial of plaintiff's request for injunctive relief.

But the Court finds that the balance of hardships and the public interest both favor the issuance of a TRO. Rocine's argument is essentially that the issuance of a TRO will harm him because it will interfere with his ability to service those clients who might wish to transfer their accounts to JP Morgan. However, nothing in the TRO precludes Rocine from sending his former clients a written announcement regarding his move to JP Morgan, and nothing will preclude Fidelity customers from transferring their accounts to JP Morgan. What the TRO bars is the use by Rocine of Fidelity's customer information-whether that information is stored in his brain or located elsewhere - to solicit customers to transfer their accounts. The injunction is granted.

(P. Dubow)

(SLC Ref. No. 2017-42-03)

NOTICE: The court decision synopsis published above represents an abbreviated description of the actual decision and is re-printed here for its educational value. The author's effort is to report concisely the substance of the decision or a selected portion of the decision; commentary or analysis is generally reserved for the italicized section at the bottom of the summary. Subscribers to SAC's Online Litigation Alert (SOLA), from which this synopsis is excerpted, have immediate access to the full decision, in addition to the synopsis.

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