Constantakis v. Bryan Advisory Services, LLC, decided today by the Pennsylvania Superior Court (Judges John Bender, Alice Beck Dubow, and James Gardner Colins), involved a dispute between financial advisors (who had a financial company called VAM) and a parent financial company (BAS) with which they had been affiliated:
[The plaintiffs] learned that Mr. Bryan [of BAS] filed [Uniform Termination Notices for Securities Industry Registration ("Form U5")] accusing [them] of unspecified SEC violations. The Form U5s contain allegations that [plaintiffs] actually sent out the protype [sic] invoices with intent to defraud clients. Mr. Bryan also filed an Investment Adviser Public Disclosure ("IAPD") concerning [one of the plaintiffs]. The IAPD explains that a termination is disclosed when the IAR was discharged after allegations were made that accused the IAR "of violating investment-related statutes, regulations, rules or industry standards of conduct; fraud or the wrongful taking of property…." The IAPD … contains essentially the same allegations as the Form U5s. Like the Form U5, the IAPD is publicly available.
BAS and Mr. Bryan blocked VAM's ability to access any of its client accounts and left VAM [the plaintiffs' company] without a platform on which to operate, effectively halting the ability of [plaintiffs] to provide direct financial services and fulfill fiduciary obligations to clients. Additionally, BAS and Mr. Bryan wrote letters to VAM's clients informing them that it had terminated the employment of [plaintiffs]….
Plaintiffs sued and got a preliminary injunction; in the trial court's words:
