Switching Firms, Account Statements

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broker4563's picture
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Joined: 2009-03-03

Hi,  I will moving from a wirehouse to an RIA very soon.  Part of the plan is to get new account forms to my clients immediately. I also plan on my having the clients' account statements on-hand to make the ACAT process very simple and very quick.  I will not have to wait for clients to locate statements, or print them, or any other sort of possible delay.
 
The question is: Is there any sort of legal issue with having these statements in my possesion?  If it is, have you ever heard of an attempt to enforce this rule?
 
I know it is an extremely common procedure for those advisors that make organized, effective moves, but I want to understand if having these is a violation of a broker/dealer, internal rule, or if it is a violation of a FINRA rule. (Or neither?)
 
Thanks in advance for your help.

Sportsfreakbob's picture
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Joined: 2008-08-24

If you are with a wire, all of whom are members of the protocol, then this is a violation of the protocol.  In which case they have the right to go after you and slap a TRO on you.A few weeks ago there was a blurb about a wirehouse that did just that to 4 brokers who left and took info that they werent supposed to take.Beyond the Protocol Agreement, i dont know what the rules are, but it does seem like a privacy violation. I think you are playing with fire. JMHO

broker4563's picture
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Joined: 2009-03-03

Thank you for the reply and insight.  By moving to an RIA I will not be within any of the firms that signed the protocol.  As such, I'm sure you're right that they could slap a TRO my way. 
 
Agreed on the privacy violation issue, but, I have full knowledge of everything in those statements already (and a lot more).  Thanks again!

Sportsfreakbob's picture
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Joined: 2008-08-24

If you are forming your own RIA, you could join the protocol. There is no cost associated with that. (I dont know how you go about joining, but I;m sure you could find out). However, you will still be bound (even more so) by the protocol agrreement

Anonymous's picture
Anonymous

Just curious...
 
We hear lots of talk about jumping FROM a wire TO an indy bd and/or an RIA.  Or jumping FROM EDJ to an Indy.  Or even jumping FROM a wire TO a wire.
 
Has anyone made the change FROM LPL TO Raymond James?  Or FROM Commonwealth TO Cambridge?  Basically, Indy to Indy...anyone?  Different rules? 
 
People talk a lot about "I'm at LPL, if they get too big and I become unhappy, I'll just switch B/Ds and that's it!"  I'm wondering how true that really is...

buyandhold's picture
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Joined: 2008-09-23

iceco1d wrote:Just curious...
 
We hear lots of talk about jumping FROM a wire TO an indy bd and/or an RIA.  Or jumping FROM EDJ to an Indy.  Or even jumping FROM a wire TO a wire.
 
Has anyone made the change FROM LPL TO Raymond James?  Or FROM Commonwealth TO Cambridge?  Basically, Indy to Indy...anyone?  Different rules? 
 
People talk a lot about "I'm at LPL, if they get too big and I become unhappy, I'll just switch B/Ds and that's it!"  I'm wondering how true that really is...I talked to an LPL advisor recently who said if he switched the clients wouldn't even know it. Maybe the statements would look different, but they would still be with XYZ Investments.

Squash1's picture
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Joined: 2008-11-19

I think that would be a pain in the rear.... having them sign all new account forms, plus all the ACAT work.... Unless you really hated your BD, but then why not look at RIA option(even with hybrid)..

Sportsfreakbob's picture
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Joined: 2008-08-24

buyandhold wrote:
iceco1d wrote:Just curious...
 
We hear lots of talk about jumping FROM a wire TO an indy bd and/or an RIA.  Or jumping FROM EDJ to an Indy.  Or even jumping FROM a wire TO a wire.
 
Has anyone made the change FROM LPL TO Raymond James?  Or FROM Commonwealth TO Cambridge?  Basically, Indy to Indy...anyone?  Different rules? 
 
People talk a lot about "I'm at LPL, if they get too big and I become unhappy, I'll just switch B/Ds and that's it!"  I'm wondering how true that really is...I talked to an LPL advisor recently who said if he switched the clients wouldn't even know it. Maybe the statements would look different, but they would still be with XYZ Investments.How is that possible? The clients still have to sign acats and new paperwork.

Anonymous's picture
Anonymous

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For starters, you might want to look up federal Reg. S-P.  Also, while you may utilize certain client information as part of the Protocol or even as part of Reg. S-P, the issue of physically taking "files" poses many, many problems -- a number of which could result in your being sued or named as a Respondent in a regulatory action.  You haven't raised the usual issues (so I'm assuming that you have the answers--which is always a dangerous assumption) but concerns about non-compete/solicit clauses often arise within the context of your scenario.

broker4563's picture
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Joined: 2009-03-03

Thank you to everyone for the responses.  Bill, I will take your advice and check-out Reg S-P.

I think my question falls in the range of possible versus plausible.  Is it possible the current Wirehouse could sue or issue a TRO?  Sure, anything like that is possible under any circumstance.  Is it plausible?  Probably not.  This is not an acrimonious split, and I'm not a mega-producer.  The odds of them retaining a search warrant for files that may or may not be in my house are below miniscule.  BTW: your assumptions are correct about the usual issues, but thanks nonetheless for bringing up those considerations. 
 
Regards All, and thank you.

Worstthingieverdid's picture
Joined: 2009-01-28

Why would you risk so much just to have a statement, you know what the client has and yeah you need it for the transfer but is it worth it?  If your clients haven't kept a single statement from the last year, I would find that highly unlikely.  Leave with the basics, account owner, type of account, addresses, and contact numbers.  If you haven't printed this already, then don't, hand write it.  If you have files missing that were once there or print these right before you leave, I think you will have some serious issues.  They will most certainly do a forensic search on your computer and if you have printed any client information, such as statements or socials, they will know when you did and what you got, trust me.  Be smart and do it the right way, never understood why everyone wanted to fill out info ahead of time???  Walking the client thru the new forms and gathering the info, gives you a chance to make sure everything is correct.   Mail the forms and ACAT to them blank, and call and walk them thru filling them out. Good Luck!

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