A lawsuit filed by Deutsche Bank Alex. Brown against a team of top-producing brokers who are leaving the firm for Barclays Wealth Management has been settled.
Deutsche had sued the brokers — Scott Zelnick, Padraig McBrien and Heidi Guldbrandsen — after they left the firm earlier this month to join Barclays. The team reportedly produced revenues of $15 million on a $5.5 billion asset base.
(Their exit from Deutsche registers as the largest move made by a single team from one shop to another this year.)
The dispute, however, "has been amicably resolved to the satisfaction of all the parties," Barclays spokeswoman Monique Wise, said in a statement. Ms. Wise declined to comment further.
The brokers were not available for comment. Deutsche spokeswoman Mayura Hooper confirmed the settlement. She declined further comment.
In an unusual twist in the case, the team was ordered by a New York court a week ago to return to Deutsche for 60 days.
New York State Supreme Court Justice Bernard Fried said the brokers' agreements with Deutsche required them to give 60 days' notice before resigning.
The brokers were ordered "to return to Deutsche Bank immediately to be able to service their clients," according to the order issued by Judge Fried.
"That's not a good situation," said Danny Sarch, founder of Leitner Sarch Consultants, Ltd., a recruitment firm.
The brokers were put in the difficult position of working at Deutsche while presumably being unable to tell clients about their pending departure, he said.
"They didn't have their ID's [anymore] and couldn't get in the building" when they returned this week, said Mr. Sarch, who was not involved in recruiting the team.
The 60-day notice requirement is similar to a so-called "garden leave" provision, which requires an individual to take paid time off before joining a competitor.
But garden leaves are usually reserved for non-producing executives, Mr. Sarch said.
(Read Mr. Sarch's blog posting on garden leave policies)
For institutional brokers, a garden leave "makes some sense," said David Gehn, a member of Gusrae Kaplan Bruno & Nusbaum PLLC, who was not involved in the case.
"If I [as the firm] introduce you to our institutional client base, I may want … some protection when you leave," he said.
The court order allowed the Deutsche team to solicit clients they brought with them from their prior firm.
The brokers came to Deutsche Bank Alex. Brown from Lehman Brothers Holdings Inc. in 2002, according to their registration records.
