Bank of Montreal wants a Texas court to intervene after a rival firm poached a team of its energy bankers.
In early March, UBS AG hired 15 BMO employees in Texas who specialized in energy acquisitions and divestitures, in order to beef up its investment banking capabilities in Houston. The news didn't ruffle feathers early on despite the sizable number of departures, mainly because some of the employees were only junior staffers. But BMO now worries confidential information was taken.
To protect itself, the Canadian bank is targeting four of the ex-employees in court, alleging they breached their fiduciary duties by "improperly taking BMO's confidential and proprietary information and by impermissibly soliciting BMO clients and employees."
The allegations are unproven and a judge has yet to approve BMO's requests, which include searching the four former employees' computers to trace what, if any, information was taken from its servers. Still, the ugly fight serves as a cautionary tale for capital markets employees who change firms.
BMO has asked a Texas court to approve digital imaging of the four former employees' personal devices, worried they sent documents from the firm's servers to their personal e-mail accounts. The traced e-mails in question are alleged to contain client pitch documents and information about prior deals.
BMO alleged in court filings that it has found evidence that Miles Redfield, the most senior banker in the group, accessed most of BMO's "transactional information and infrastructure" in the days and weeks leading up to his resignation in early March. The name of folders on the bank's servers he is alleged to have accessed include "2015 FY In Progress" – presumably for 2015 fiscal year in progress – "2013 projects," "2014 projects" and "2015 projects."
The other employees named in BMO's case – David Edwards, Robin Gaines, and Justin Colby – are also being targeted for allegedly accessing confidential and proprietary information right before they left the bank.
No one named in the court documents – people who range in rank from vice-president to managing director – could be reached for comment.
BMO has asked all employees who resigned from the Houston office to return any confidential information, but to date nothing has been returned.
"The individual respondents have improperly accessed, retained, or shared BMO's confidential and proprietary information," BMO wrote in court documents. "All of this information was of such a confidential and sensitive nature that disclosing it to a competitor would put BMO at a competitive disadvantage."
On top of the digital search, BMO asked that the four former employees be prevented from contacting BMO clients and employees and from starting work at UBS.
"BMO Capital Markets takes our obligations to protect confidential information very seriously. We will seek to do that with all means at our disposal, including the courts," a spokesperson wrote in an e-mail.
Since the financial crisis, BMO has emphasized growing its mid-market investment banking business in the United States.
However, its energy acquisitions and divestitures deal flow was subdued in recent years. BMO's U.S. energy practice ranked 20th in 2014 for mergers and acquisitions, behind RBC Dominion Securities Inc. and Scotia Capital Inc., and 28th the year before.