Charles Schwab is taking one of its former reps to court, accusing him of being a “disloyal employee” who allegedly departed wielding trade secrets on thousands of Schwab clients.
Schwab filed a request in Texas federal court this week for a preliminary injunction against former Schwab employee Roberto Ortega. They’re seeking that the court bar him from allegedly soliciting Schwab clients or using client information from his previous employer while the parties wait to start FINRA arbitration.
According to SEC records, Ortega joined Schwab in 2022 after previous stints at Fidelity and J.P. Morgan. When he left Schwab, Ortega was a vice president and financial consultant, overseeing clients with about $1.5 billion in collective assets, most of whom were located near Schwab’s bank branch in The Woodlands, Texas.
According to Schwab, Ortega didn’t develop these clients through his own connections, but they were given to him by the firm. The rep allegedly helped clients make a personal financial plan and partner with other Schwab employees on needs, including estate, education and retirement planning.
Schwab argued they had provided Ortega with “extensive” access to client records to do his job and that there was no public source for Ortega to access identifies and contact information of Schwab’s clients.
As part of his employment agreement, Schwab claimed Ortega signed a contract specifying he would give four weeks’ notice before leaving the firm, would not take confidential client information and would not solicit Schwab clients for 18 months after departing.
According to the suit, Schwab can track when its reps access its “Client Central” database, which includes client information. The firm alleged that Ortega logged into the database at 11:05 a.m. on May 6 and “methodically accessed” 1,008 client-overview screens until 11:48 p.m. that night. Over a day and a half, the rep accessed the database 1,689 times, and he continued to access data on later dates, according to Schwab,
According to the suit, in the “normal and historical course of business,” Ortega would tend to access the database 10 times daily. Schwab also claimed Ortega was repeatedly accessing client “overview” screens, which contained basic information about clients, including names and contact information.
“From a timing perspective, Ortega’s access was inconsistent with any legitimate business purpose—Ortega did not need to be accessing Client Central in such large numbers and at such late hours,” the complaint read. “Additionally, as he worked his way through Client Overview screens, he did so in rapid succession, reviewing one after another and viewing multiple Client Overview screens in less than one minute.”
Instead, Schwab speculated Ortega was copying or screenshotting the data. In the complaint, the firm alleged another employee saw Ortega holding his phone up to his computer screen multiple times, hypothesizing he was taking photos of client information.
On July 1, Ortega resigned without notice and began working for the Arlington, Va.-based Nhabla. According to its latest Form ADV, the firm is an RIA with approximately $108,660 in managed assets. Its principal owners were Ortega and Johnny Medina (who also acted as the firm’s chief compliance officer). Ortega could not be reached for comment prior to publication.
According to Schwab, Ortega had contacted multiple clients, enticing them to move their business from Schwab. Additionally, the firm alleged Ortega accessed client databases for 2,295 clients, though he only worked with about 365 of them; Schwab alleged that Ortega also wanted to take information on clients he did not service as part of his job.
"Schwab considers the protection of client information and confidentiality to be of utmost importance and expects that its representatives will comply with their contractual and legal obligations," a firm spokesperson said about the litigation. "We intend to enforce our rights and hold Mr. Ortega accountable for violating his obligations and taking Schwab’s confidential information."
As part of the suit, Schwab requested Ortega return any client information he allegedly took and halt soliciting Schwab clients, as the firm accused him of doing. The firm asked that the court order all the parties to “proceed toward an expedited arbitration” in FINRA proceedings.
