Dynasty Financial Partners is accusing Merrill Lynch of “sleight of hand” in the ongoing legal dispute over a $129 billion, Atlanta-based RIA that left the wirehouse to go independent with Dynasty’s support.
Dynasty responded this week to accusations from Merrill, detailed in its own February motion, that argued the firm walked back its pledge to arbitrate disputes involving OpenArc.
According to Dynasty, Merrill is misreading a judge’s earlier order that paused the federal case while the parties fought it out in FINRA arbitration. Dynasty argued that the order pertained to OpenArc and Merrill, not to third parties, including Dynasty.
OpenArc’s leadership left Merrill and brought with them some 120 employees, including over 50 financial advisors, who oversaw $129 billion at Merrill’s Global Corporate and Institutional Advisory Services unit. OpenArc is led by Senior Managing Partner Erik Bjerke.
The move was an industry blockbuster, creating a large, sophisticated RIA that would typically take years and multiple acquisitions to build. The firm is majority-owned by senior leadership, with Dynasty holding a non-controlling minority stake.
In response, Merrill sued OpenArc, its lead advisors, and Dynasty, claiming the team was a “speciality” practice group gifted with existing relationships by the firm.
Merrill claimed the defendants conspired to poach the firm’s business while violating the Protocol for Broker Recruiting (which allows advisors to move between firms and take certain client information without the threat of reprisal).
Dynasty and OpenArc claimed they followed the Protocol. Further, they claimed the team lost $45 million in revenue after their calls for additional investment from the wirehouse went unheeded.
According to Dynasty’s latest motion, Dynasty was not a party to the agreement to arbitrate the dispute. The firm’s lawyers argue that the idea that Dynasty never informed Merrill that it did not consent to arbitration is faulty, as it was never part of the agreement in the first place.
Merrill should have been aware that Dynasty was not a FINRA-registered member, despite a claim from Merrill’s counsel that he believed it was during a hearing in which he called on Dynasty to agree to the arbitration.
Dynasty argued that Merrill’s counsel, when asked by the court who was participating in the arbitration process, wrongly stated that “everyone is going,” and that Dynasty should not be bound to an agreement by “negative consent.”
In a statement to Wealth Management, a Merrill spokesperson said that “as our previously filed motion states, we are simply seeking the right to pursue our claims against Dynasty in the appropriate forum.”
