On Thursday afternoon, Morgan Stanley retail chief James Gorman was freed by a New York State judge of the temporary restraining order that prevented him from raiding Merrill Lynch’s brokerage ranks.
New York Supreme Court Judge Emily Goodman dissolved the order she first issued just last week in response to a memorandum of law filed by Merrill, after Gorman hired three of his former Merrill colleagues just five weeks into his new job. Merrill claimed that Gorman had violated his employment contract, in which he agreed not to solicit any Merrill Lynch employees for one year following his departure in February.
In a statement, Morgan Stanley said, “The court has recognized that this TRO is without merit and it was immediately dissolved. Merrill Lynch’s TRO was a failed attempt to slow the number of their employees from reaching out to us. Today's ruling further establishes that Mr. Gorman is not restricted from speaking to Merrill Lynch employees who reach out to him and express interest in joining our firm.” No statement from Merrill was available at this time.
Two weeks ago, Gorman announced a new regional management structure, with former Merrill executives Jerry Miller and Richard Skae serving as two of four regional managers. Meanwhile, Andrew Saperstein, another former colleague from Merrill, joined Morgan as chief operating officer of national sales next week.
Merrill claimed in its brief that Gorman could do “irreparable harm” if he lures more recruits to Morgan Stanley.
“If people really want to move, then the courts can’t stop them,” said Dick Bove, an analyst for Punk Ziegel, said. “[Gorman] worked at Merrill for some time, and obviously built up loyalties among people who worked for him. But the point is, so what. I think that Morgan lost a lot of people to Merrill about a year ago, and Morgan got very feisty about it, so now Merrill is going back at Morgan. If Merrill is a good place to work, it will keep its people, and the same with Morgan,” he said.
The case will now go to arbitration, though no date has yet been set, according to Morgan Stanley's legal department.
