TD has sued former employees Gregg Desmarais and Brett Bartkiewicz, alleging that they “abruptly” resigned in April, violating their contracts by enticing clients with millions of dollars in assets to defect to rival Raymond James, according to a complaint filed in the U.S. District Court for the District of Connecticut.
Within one week of their departures, TD lost at least 10 accounts worth more than $22 million, WealthManagement.com reported.
TD argued that, according to a signed agreement, Desmarais wouldn’t “contact, call upon or solicit” any client to lure away their business from the bank at least for 12 months following the end of his employment with the bank.
Desmarais and Bartkiewicz both joined Raymond James unit Crescent Point Private Wealth as partners and family wealth advisers, their LinkedIn profiles indicate.
TD painted a contrasting picture, though, when it reported Desmarais’s departure to regulators in April, according to Bloomberg. In a disclosure filed with the Financial Industry Regulatory Authority, TD stated that Desmarais had voluntarily resigned after the bank launched an internal review of suspected anti-money laundering policy violations.
The Canadian banking giant is under investigation after Justice Department agents revealed a money laundering operation that stemmed from a scheme under which criminals moved at least $653 million of fentanyl proceeds through branches in New York and New Jersey.
According to rumors, TD’s AML woes were the catalyst behind the collapse of the First Horizon deal. The lender disclosed in August that it was cooperating with a DOJ examination into the bank’s compliance with AML measures.
Additionally, the bank is facing three other anti-money laundering inquiries in the U.S. and plans to set aside $450 million to cover the penalty cost from one of the three U.S. regulators, the bank said in May.
Though the case's hearing is pending, a temporary restraining order prohibits Desmarais from contacting his former firm's clients.
Meanwhile, Desmarais’ FINRA profile under “employment separation after allegations” dated April 24 indicates it is a voluntary resignation but “[a]n internal review was initiated of the Representative's actions based on the suspected violation of firm Anti-Money Laundering (AML) policy by the Representative.”
TD Bank declined to comment to Bloomberg on the Desmarais lawsuit since it’s an ongoing legal case, but spokesperson Lisa Hodgins told the publication that the internal review mentioned on the former adviser’s FINRA profile “is not related to the bank’s broader AML investigation.”
Hodgins said the probe that was brought to FINRA’s attention did not end before Desmarais left, and has no connection with the non-solicitation lawsuit, which does not mention any AML woes.
Michael Roche, a lawyer representing Desmarais, said his client “denies TD’s baseless allegations.”
“I would also like to note that TD’s lawsuit against my client has nothing to do with TD’s AML issues,” Roche told Bloomberg.
