Monday, August 04, 2008

UBS Make Move On Pickpockets

We have often reported on UBS's troubles, not from a case of schadenfreude, but because it is a big deal when the biggest bank in Switzerland gets its knickers in a twist. But today I am pleased to stick up for the bank in a case that has probably touched all of us in the industry at one time or another.

If you have ever started a business in the financial industry you will have suffered the problem of spending hard earned money training people up and spending cold hard Euros on marketing. You get to the point where you now have a decent client base producing good money for your operation then, suddenly, someone in your company decides that they can do it better and leaves to start their own company, taking 'their' client base with them.

Of course the excuses fly "I built the relationship"... "The client only wants to deal with me"... "The client is worried about your business"........... all b******s, in my opinion.

It is a very easy way for someone to set up their business on the back of your money. Garden leave is supposed to take care of this or your cast iron contract, drawn up by expensive lawyers who told you it was unbreakable.

The truth is garden leave and contracts rarely work and you find yourself seething at the fact that you have affectively helped someone else start their business with far less risk than you did.

Enter UBS. They have decided that they won't be having any of that having just won an injunction preventing start-up wealth manager Vestra from poaching its staff and clients.

High Court judge Charles Openshaw said he believed some of the bankers who quit to join Goldman Sachs-backed Vestra had acted as "recruiting sergeants" for Vestra whilst still at UBS.

"Every business is entitled to expect loyalty, fidelity and diligence from their staff. That is part of the bargain for which they are paid," said Mr Justice Openshaw. The bank has lost 75 employees to Vestra, which was founded by David Scott, and is suing the company, Mr Scott and four key former UBS bankers - Duncan Carmichael-Jack, Neil Pedley, Paul Pollard and David Guild.

Vestra believe they have done nothing wrong and a comment to the Telegraph from a source close to Vestra said: "UBS are showing they are rattled by the competition and are trying strangle it at birth. What Vestra has done is perfectly legitimate - staff and clients should be free to make their own decisions and there has been no abuse of confidential information."

The Judge in the case, Mr Justice Openshaw, appears to disagree saying "I am 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 added: "It is in my judgment an unlawful conspiracy dressed up as lawful competition."

It may appear to be a situation that is petty when you consider the problems in the market at the moment but I believe that this is an important case for our industry.

Spending money to build a business only to have it taken from under you is not a pleasant experience, but should UBS win this case it may become a little easier to protect effort and cash that has been spent building your business from those that would use their positions in your organisation to take what is yours.

No comments: