A conversation with David Gehn, Partner, Ellenoff Grossman & Schole LLP
Overview
While advisors successfully transition out of non-Protocol firms each and every day, doing so comes with added risks. Attorney David Gehn, whose expertise is in representing advisors in transition from Protocol and non-Protocol firms alike, explores the topic and shares advice with Jason Diamond.
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About this episode…
One of the most significant concerns advisors have when making a move – particularly those transitioning without the protection of the Protocol – is the fear of legal retribution from their firm.
That is, the dreaded TRO, or temporary restraining order, which can stop their business dead in its tracks.
In 2004, Smith Barney, Merrill Lynch, and UBS created the Protocol for Broker Recruiting Protocol to stave off the common and expensive litigation that occurred when a departing advisor left one firm to join a competitor.
Essentially, these firms and others who opted in (including Morgan Stanley and Wells Fargo) agreed to a “cease-fire” of sorts, permitting advisors to freely leave with a limited amount of client information and actively solicit these clients.
The sense of relief that Protocol bestowed upon transitioning advisors came to a halt in 2017 when Morgan Stanley and UBS opted out. As of this recording, Wells Fargo and Merrill Lynch are still members.
Yet many other firms have never been part of the Protocol: For example, Edward Jones, a firm that has seen its fair share of departing advisors over the last year.
While advisors successfully transition out of non-Protocol firms each and every day, doing so comes with added risks. In this episode, attorney David Gehn, whose expertise is in representing advisors in transition, speaks with Jason Diamond. They answer all these questions and more:
- What do advisors from non-Protocol firms such as Ed Jones, Morgan Stanley, and UBS and Protocol firms alike need to consider when making a move?
- What should advisors be most concerned about?
- What extra steps do advisors from non-Protocol firms need to take to avoid litigation when making a move?
- How do advisors from Ed Jones and the like position themselves for a “successful” transition with the highest level of portability and the lowest level of risk?
Plus, given David’s expertise with advisors from Ed Jones and other non-Protocol firms, he shares first-hand insight on the factors driving advisor movement.
Listen in to glean advice from an attorney experienced in advisor transitions from Protocol and non-Protocol firms alike.
Related Resources
Expert Advice on Portability: What You Need to Know to Prepare for a Move
Grier Rubeling, Advisor Transition Services, joins this special Industry Update episode to share practical portability tips and actionable transition advice for financial advisors considering or preparing to change firms. Listen->
Financial Advisors: Is Now the ‘Right Time’ to Start Exploring Your Options?
The truth is that taking the time to get educated about the opportunities available is a smart business decision—regardless of whether you want or are ready to make a move. Read->
Beyond the Risk: What’s Driving Non-Protocol Advisors to Independence?
Why are advisors not protected by the Broker Protocol – and sometimes facing significant garden leave – willing to take on the added risks to become independent? Listen->
An Open Letter to Edward Jones Advisors
What’s changed at Ed Jones—and what’s driving so many advisors to seek other options? While many brokerage firms have seen noticeable advisor attrition in recent years, the velocity of moves away from Ed Jones, a firm that built its legacy on a strong culture, begs a few important questions. Read->
Edward Jones Breakaway: From Knocking on Doors (Literally) to Building a $2B Independent Enterprise
Jim DeCota started his career in wealth management in the financial advisor training program at Edward Jones, building his business to $85mm in AUM in just over a decade, before leaving to build what is today $2B+ Enso Wealth Management. Listen->
David Gehn
Partner, Ellenoff Grossman & Schole LLP
David A. Gehn, a member of the Firm, is the head of the firm’s Litigation and Regulatory Enforcement group. Mr. Gehn has been representing clients ranging from the largest broker-dealers and registered investment advisors to individuals in large and complex civil, criminal, and regulatory investigations and litigation, as well as in contractual and transitional matters for over the last 25 years. Mr. Gehn also represents professional athletes and was formerly a certified NFL Contract Advisor.
Since 1992, Mr. Gehn has concentrated his practice in the financial services industry. Early in his career, among other things, Mr. Gehn filed approximately 20 cases against the self-professed Wolf of Wall Street, Jordan Belfort, and Stratton Oakmont, all of which settled for millions of dollars in the aggregate. Mr. Gehn also filed other well publicized cases in the 1990’s, including a civil action against Marion “Suge” Knight, former owner of Death Row Records, based upon an assault at a Death Row Christmas party.
From 1998 to 2000, Mr. Gehn was General Counsel of Bluestone Capital, a broker-dealer, and its online trading division, Trade.com.
Prior to joining the firm, Mr. Gehn was a Member of Gusrae Kaplan Nusbaum, PLLC for over 16 years. While there, he was one of three attorneys who filed a federal class action in the Southern District of New York against, Fairfield Greenwich Limited, et al., the largest Bernard L. Madoff Investment Securities “feeder fund”, which settled for an amount in excess of $250 million. From 2014-2016, Gusrae Kaplan was recognized by BTI Consulting Group as an “honor roll” member on its list of the nation’s 50 “most feared” litigation law firms.
Overall, Mr. Gehn has almost 100 reported FINRA arbitration awards, which include 7 matters in which he has obtained expungement for his clients. He also litigates in federal and state courts, with several matters resulting in published opinions.
Mr. Gehn has represented financial professionals in multiple SEC, FINRA, and CFP investigations and enforcement proceedings. In 2020, Mr. Gehn has already successfully closed an SEC Investigation with “no action” and 5 FINRA and State regulatory investigations by way of a “letter of caution”.
Mr. Gehn also advises financial professionals concerning the transition of their financial practice, FINRA inquiries, non-solicit/non-compete issues, and Protocol compliance. Mr. Gehn was named the “top Protocol attorney in the United States” by AdvisorHub.” Over the last 2 years, Mr. Gehn has worked with over 125 financial professionals in the transition of their professional practices. He is familiar with the traditional, independent, RIA, and bank brokerage models.
Mr. Gehn also has an active practice representing professional athletes. Since 2016, Mr. Gehn has represented at least 1 player selected in the 1st round of the NFL draft, including a top 15 selection in the 2017 NFL Draft and a top 10 selection in the 2016 NFL Draft. Mr. Gehn also represents several other active and retired players.
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