Charles Schwab is taking considered one of its former reps to court docket, accusing him of being a “disloyal worker” who allegedly departed wielding commerce secrets and techniques on hundreds of Schwab shoppers.
Schwab filed a request in Texas federal court docket this week for a preliminary injunction towards former Schwab worker Roberto Ortega. They’re searching for that the court docket bar him from allegedly soliciting Schwab shoppers or utilizing consumer info from his earlier employer whereas the events wait to start out FINRA arbitration.
In line with SEC data, Ortega joined Schwab in 2022 after earlier stints at Constancy and J.P. Morgan. When he left Schwab, Ortega was a vice chairman and monetary guide, overseeing shoppers with about $1.5 billion in collective belongings, most of whom have been positioned close to Schwab’s financial institution department in The Woodlands, Texas.
In line with Schwab, Ortega didn’t develop these shoppers by way of his personal connections, however they got to him by the agency. The rep allegedly helped shoppers make a private monetary plan and accomplice with different Schwab workers on wants, together with property, training and retirement planning.
Schwab argued that they had supplied Ortega with “intensive” entry to consumer data to do his job and that there was no public supply for Ortega to entry identifies and call info of Schwab’s shoppers.
As a part of his employment settlement, Schwab claimed Ortega signed a contract specifying he would give 4 weeks’ discover earlier than leaving the agency, wouldn’t take confidential consumer info and wouldn’t solicit Schwab shoppers for 18 months after departing.
In line with the go well with, Schwab can monitor when its reps entry its “Consumer Central” database, which incorporates consumer info. The agency alleged that Ortega logged into the database at 11:05 a.m. on Could 6 and “methodically accessed” 1,008 client-overview screens till 11:48 p.m. that night time. Over a day and a half, the rep accessed the database 1,689 instances, and he continued to entry knowledge on later dates, in response to Schwab,
In line with the go well with, within the “regular and historic course of enterprise,” Ortega would are inclined to entry the database 10 instances each day. Schwab additionally claimed Ortega was repeatedly accessing consumer “overview” screens, which contained fundamental details about shoppers, together with names and call info.
“From a timing perspective, Ortega’s entry was inconsistent with any reputable enterprise function—Ortega didn’t have to be accessing Consumer Central in such massive numbers and at such late hours,” the grievance learn. “Moreover, as he labored his approach by way of Consumer Overview screens, he did so in fast succession, reviewing one after one other and viewing a number of Consumer Overview screens in lower than one minute.”
As a substitute, Schwab speculated Ortega was copying or screenshotting the info. Within the grievance, the agency alleged one other worker noticed Ortega holding his telephone as much as his pc display a number of instances, hypothesizing he was taking pictures of consumer info.
On July 1, Ortega resigned with out discover and started working for the Arlington, Va.-based Nhabla. In line with its newest Kind ADV, the agency is an RIA with roughly $108,660 in managed belongings. Its principal house owners have been Ortega and Johnny Medina (who additionally acted because the agency’s chief compliance officer). Ortega couldn’t be reached for remark previous to publication.
In line with Schwab, Ortega had contacted a number of shoppers, attractive them to maneuver their enterprise from Schwab. Moreover, the agency alleged Ortega accessed consumer databases for two,295 shoppers, although he solely labored with about 365 of them; Schwab alleged that Ortega additionally wished to take info on shoppers he didn’t service as a part of his job.
“Schwab considers the safety of consumer info and confidentiality to be of utmost significance and expects that its representatives will adjust to their contractual and authorized obligations,” a agency spokesperson mentioned in regards to the litigation. “We intend to implement our rights and maintain Mr. Ortega accountable for violating his obligations and taking Schwab’s confidential info.”
As a part of the go well with, Schwab requested Ortega return any consumer info he allegedly took and halt soliciting Schwab shoppers, because the agency accused him of doing. The agency requested that the court docket order all of the events to “proceed towards an expedited arbitration” in FINRA proceedings.
