TRANSITIONING BROKERS AND THE BROKER PROTOCOL- WHAT NOT TO DO WHEN CHANGING FIRMS

Published 18 November 2015

The Protocol for Broker Recruiting (the “Protocol”) was created and adopted by three major wirehouses in 2005- Citigroup Global Markets (Smith Barney), Merrill Lynch and UBS Financial Services- to “further the clients’ interest in privacy and freedom of choice in connection with the movement of their Registered Representatives between firms”. Since the three founding members signed the Protocol, over 1,300 firms have now signed and adopted it.

The Protocol, however, is a surprisingly simple and short document, less than three double spaced pages in length. It contains no definitions and offers only the barest of guidance of what departing brokers leaving one Protocol firm for another can, and cannot do.

The Protocol merely states that if the departing representative, and the new firm, follow the Protocol, “neither the departing Representative nor the firm that he or she joins would have any monetary liability to the firm that the Representative left by reason of the Representative taking [certain specified information] or the solicitation of the clients serviced by the Representative at his or her prior firm”. There are five specified pieces of information (please note: information NOT documents) that a departing broker can take when leaving a member firm- the names, addresses, phone numbers, email addresses and account titles only of those clients “that they serviced at the prior firm”.

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