banking in years, UBS has won the first stage of a campaign to stop
former employees now at UK wealth startup Vestra Wealth from
poaching its investment clients or the bank’s staff.
High Court judge Mr Justice Openshaw in
early August granted UBS a court order to prevent five former UBS
employees and their new employer, Vestra, from approaching any UBS
wealth management or stockbroking clients or asking any more UBS
employees to leave the bank to join the startup.
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As many as 75 people have since quit UBS to
join Vestra, founded by David Scott, a former UBS senior wealth
executive.
UBS had sought a “springboard injunction” to
stop Vestra or its staff approaching any of UBS’s UK-based clients
until the bank brings a larger legal case against Vestra in
October. It accused Scott and his colleagues of conspiring over
many months to deliberately steal the bank’s business.
Justice Openshaw said that he was “firmly of
the view that the claimants have put forward a formidable case that
there was an unlawful plan to poach staff and clients from UBS”. He
declared: “It is in my judgement an unlawful conspiracy dressed up
as lawful competition”.
It was likely that some of the employees had
been acting as “recruiting sergeants’’ for Vestra while still
working at UBS, he said.
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By GlobalData“Every business is entitled to expect loyalty,
fidelity and diligence from their staff. That is part of the
bargain for which they are paid.’’
Vestra, in which Goldman Sachs was officially
due to open for business on August 4.
Justice Openshaw refused Vestra lawyer Charles
Bear’s request for permission to appeal. The effect of the ruling
“will be to disrupt Vestra’s business’’, Bear said, saying he will
prove at the October trial that UBS is bringing “a completely false
claim.’’
A Vestra spokesman said that UBS is
“complaining about successful competition,’’ saying in a short
statement, “This recruitment campaign was conducted in good faith
and after taking legal advice every step of the way. This only
makes today’s provisional decision more surprising.”
UBS said: “This legal action, which the
court… upheld pending trial in October, was to ensure that
certain senior departing employees abided by the contractual
obligations that they agreed to when they joined UBS,’’ it said in
a statement.
UBS had accused a group of former and
departing executives switching to Vestra of orchestrating a “smash
and grab raid” on its UK wealth management arm. In the hearing, UBS
wealth managers who left for Vestra said they departed because
their clients believed investments with UBS were put at risk by the
bank’s huge subprime exposures.
Lawyers for UBS told the court in an earlier
preliminary hearing that the bank’s UK wealth management arm had
been left “utterly paralysed” by the departure of 75 staff to
Vestra since May. One team was so depleted that it was left with
only a secretary.
Andrew Sutcliffe, QC, acting for Vestra, had
argued that there were no legal grounds for such a broad injunction
and that the application belonged in “cloud cuckoo land”. He said
that the employees had chosen to leave UBS because they were
dissatisfied with the Swiss bank’s handling of the UK wealth
management operation since it acquired Laing & Cruickshank in
2004.
Sutcliffe said: “It was an extremely unhappy
ship and they wanted out.”
Lawyers for Vestra submitted into evidence
e-mails and letters from 40 of the departing employees that
contained a number of complaints about UBS.
The letters claim mismanagement, excessive
bureaucracy and an “aggressive” sales culture at the bank.
