Tuesday, March 10, 2009, 3/10/2009 09:59:00 AM

Deutsche Bank Suing Departed Financial Advisor Now Employed with Morgan Stanley - Alleging Trade Secrets Theft

By Todd

Law360 is reporting that the U.S. investment and securities arm of Germany's Deutsche Bank is suing a former employee it claims stole confidential information and poached two assistants when he took a job with rival Morgan Stanley on Friday.

This suit comes close on the heels of a suit filed by Merrill Lynch against Deutsche Bank for poaching 12 senior bankers from Merrill Lynch: http://www.bloomberg.com/apps/news?pid=20601087&sid=azNUQ2me57rk&refer=home.

Deutsche Bank Securities Inc. filed a complaint in the U.S. District Court for the District of Columbia on Monday seeking a preliminary injunction against James Wohlgemuth pending the outcome of an arbitration proceeding before the Financial Industry Regulatory Authority.

Wohlgemuth worked as a financial adviser in Deutsche Bank's Washington, D.C., branch office for almost 22 years before "abruptly" resigning to work at Morgan Stanley on March 6, the bank claims.

According to the suit, Wohlgemuth poached two Deutsche Bank sales assistants — Kathryn Collison and Cristina Gabalda — to join him the same day.

The suit also alleges Wohlgemuth breached the bank's code of conduct and his common law obligations by stealing the names, addresses and phone numbers of clients before his resignation.

The financial adviser “improperly solicited” these clients to close their Deutsche Bank accounts and open new ones at Morgan Stanley, which offered “significant financial inducements” to Wohlgemuth in return, according to the complaint.

The bank urged the district court to issue a temporary restraining order and a preliminary injunction barring Wohlgemuth from further using Deutsche Bank's confidential and proprietary information and from soliciting any employees of his former division to work for him until the resolution of the bank's claims in arbitration.

According to the suit, Wohlgemuth had worked for Deutsche Bank since August 1987 before his defection to Morgan Stanley. During his employment with the bank, Wohlgemuth serviced approximately 1,500 accounts with assets of about $424 million and earned almost $3 million in commissions in 2008 alone.

The suit claims Wohlgemuth had access to highly confidential Deutsche Bank customer files during his employment and violated the bank's code of professional conduct when he took the information with him on his departure.

The code of conduct, the bank said, stipulates that employees must handle confidential and proprietary information — including customer lists and business plans — “in strict confidence.” It also bans workers, during the term of their employment and for 120 days following departure, from soliciting former co-workers from their jobs.

The firm said Wohlgemuth was fully aware of his obligations to comply with its internal policies regarding confidentiality of its trade secrets.

“The trade secret information that, on information and belief, defendant has misappropriated was entrusted to Deutsche Bank by its customers with the expectation that it would remain confidential and would not be disclosed to third parties. Defendant had access to this information solely by virtue of his employment by Deutsche Bank,” the bank said. “Deutsche Bank's customer list is the lifeblood of its business.”

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