United States District Court, Middle District of Pennsylvania
November 4, 1999
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., PLAINTIFF,
DONALD L. RODGER, ROBERT A. BOWEN, AND JAMES W. IGO, DEFENDANTS.
The opinion of the court was delivered by: Caldwell, District Judge.
The plaintiff, Merrill Lynch, Pierce, Fenner & Smith, Inc., filed
this suit seeking temporary injunctive relief against three financial
consultants (commonly known as stock brokers), formerly in its employ,
until there is an arbitral resolution of its claim against them for
violating certain restrictive covenants in their employment agreements.
The defendants are Donald L. Rodger, Robert A. Bowen, and James W. Igo,
now working for Prudential Securities Incorporated.
We are considering Merrill Lynch's motion for a preliminary injunction
under Fed.R.Civ.P. 65(a). The motion seeks to enjoin the defendants
from, among other things, soliciting any business from any Merrill Lynch
client that they served or whose names became known to them while they
were employed by Merrill Lynch.
On November 2, 1999, we held a hearing on the motion. Based on the
parties' submissions and the evidence produced at the hearing, the
following is the background to the motion, including pertinent procedural
A. Factual Background.
The three defendant stockbrokers formerly worked for Merrill Lynch at
its office in York, Pennsylvania as financial consultants. Defendant
Rodger began in 1979, Bowen in August 1986, and Igo in November 1995.
Upon beginning their employment with Merrill Lynch, they each signed
employment agreements containing restrictive covenants. Rodger signed an
agreement captioned a "Financial Consultant Agreement," Bowen an
agreement captioned an "Account Executive Agreement," and Igo an
agreement captioned a "Financial Consultant Employment Agreement and
The contractual language varied but, in pertinent part, all three
agreements imposed the following obligations on the defendants. First,
the defendants agreed that all records of Merrill Lynch, including client
names and addresses, were the property of Merrill Lynch and were to be
treated as Merrill Lynch's confidential information. Second, after their
employment ended, the defendants would not solicit for a period of one
year Merrill Lynch clients that they had served, or any other Merrill
Lynch clients they had come to know about while employed by Merrill
Lynch. Defendant Rodger's and Bowen's agreements limited this restriction
to clients residing within 100 miles of the Merrill Lynch office where
the defendants worked.
Third, all three agreements provided for some form of equitable
relief. Rodger and Bowen agreed that they would:
consent to the issuance of a temporary restraining
order or a preliminary or permanent injunction to
prohibit the breach of any provision of this
contract, or to maintain the status quo pending the
outcome of any arbitration proceeding which may be
Complaint, exhibits A and B).
Igo's agreement was more detailed as to equitable relief. If he breached
any of the pertinent provisions, it provided as follows:
I agree that Merrill Lynch will be entitled to
injunctive relief. I recognize that Merrill Lynch will
suffer immediate and irreparable harm and that money
damages will not be adequate to compensate Merrill
Lynch or to protect and preserve the status quo.
Therefore, I CONSENT TO THE ISSUANCE OF A TEMPORARY
RESTRAINING ORDER or A PRELIMINARY or PERMANENT
INJUNCTION. . . .
(Complaint, exhibit C) (capitals in original). This clause further
specified that the injunctive relief could include not just a prohibition
on solicitation but on "accepting business from any Account who was
solicited" in violation of the agreement "or whose records and
information was used" in violation of it.
Rodger's and Bowen's agreements specifically provided that the
agreements would be "construed, and the validity, performance and
enforcement thereof shall be governed by the laws of the State of
Pennsylvania." Igo's agreement had a choice-of-law provision that was not
as direct but which also called for the application of Pennsylvania law.
Late in the afternoon of Friday, October 15, 1999, the defendants
resigned from Merrill Lynch without notice and immediately began working
for Prudential. They took with them names and addresses of clients they
had serviced while at Merrill Lynch.
On the same day, Prudential used this information taken from Merrill
Lynch records to mail letters to most of these clients and signed by the
defendant who had handled their account, informing them that the
defendant had moved to Prudential and, inferentially, soliciting their
business. Enclosed with the letter was a transfer form
for each account already filled out with the client's name. On Monday,
October 15, 1999, Prudential sent out another group of letters.
At the same time, beginning on Friday night and continuing through the
weekend, the defendants telephoned a number of clients and informed them
of their new affiliation.
Shortly before they departed Merrill Lynch, the defendants were
servicing a significant number of clients. Rodger was responsible for
some $160 million in assets (significantly reduced shortly before his
departure for reasons we need not discuss) and would have generated about
$900,000 in annualized commissions for Merrill Lynch in 1999. Bowen was
responsible for some $180 million in assets in partnership with another
broker which generated from his efforts about $400,000 in commissions for
Merrill Lynch during the last 12 months. Igo was responsible for some $62
million in assets which would have generated about $400,000 in annualized
commissions for Merrill Lynch for 1999. About 15 to 20% of the assets of
the Merrill Lynch York office was being handled by these defendants.
Rodger was not always a broker at Merrill Lynch. For ten years, he was
an office manager. He became a broker in 1989 and at that time was
assigned some $35 million in assets from a retiring broker. He was
eventually put in charge of the D.L. Rodger Group, an informal
partnership within Merrill Lynch which included Bowen and Igo. The Group
had inherited some clients from retiring Merrill Lynch brokers.
At the November 2 preliminary-injunction hearing, Rodger testified that
the TRO has prevented him from contacting clients, and if continued, in
effect, would cause him to start over in the business at age 56. All
three brokers testified that an injunction would cause financial
hardship, but all three admitted that they realized at the time their
decisions to leave Merrill Lynch might result in litigation against
Also at the hearing, the defendants submitted 24 affidavits from
customers serviced by the defendants. These customers affirmed which
defendant they considered to be their broker, that they wanted to
transfer their accounts from Merrill Lynch to Prudential so that their
accounts could continue to be handled by the broker of their choice, and
that they had "not been solicited, implored, pressured, coerced, urged,
extolled or threatened . . ." to make this choice, which they make
freely. They "demand that Merrill Lynch transfer [their] assets without
further delay and do nothing to interfere with [their] rights to do so."
These demands were made in accord with rules of the New York Stock
Exchange (NYSE) and NASD governing the responsibility of brokerage firms
to honor their clients' requests to transfer their accounts to another
firm. Both NYSE Rule 412(a) and NASD Rule 11870(a) require a brokerage to
honor such a request expeditiously.*fn1
B. Procedural History.
On Monday, October 18, 1999, Merrill Lynch filed its complaint,
invoking our diversity
jurisdiction, and alleging that the defendants were violating the
employment agreements by using Merrill Lynch documents to solicit Merrill
Lynch clients on behalf of Prudential. Merrill Lynch made state-law
claims for breach of contract, conversion, breach of fiduciary duty and
The plaintiff does not seek damages or permanent injunctive relief.
Instead, it seeks only temporary injunctive relief to enforce the
restrictive covenants until its claim against its ex-employees can be
litigated in arbitration under Rule 10335(g) of the National Association
of Securities Dealers (NASD) Code of Arbitration Procedure. To that end,
at the same time it filed suit in this court, Merrill Lynch filed a
statement of claim in arbitration against the defendants.
Also on October 18, the plaintiff moved for a temporary restraining
order prohibiting the defendants from soliciting Merrill Lynch clients,
including clients they may have serviced, or using any documents they may
have taken with them. We granted the TRO the same day. On October 20, we
modified the order to specify that it was not intended to limit or affect
the arbitration of the dispute under NASD rules.
On Thursday, October 21, 1999, under NASD Rule 10335, the defendants
sought interim injunctive relief from a single arbitrator, as allowed by
NASD rules. On October 25, the single arbitrator declined to disturb our
TRO, relying in part on NASD Rule 10335(g), reasoning that any relief
from our TRO had to come from an arbitration panel, rather than a single
arbitrator. In material part, that rule provides that if a court issues
an injunction, the arbitration of any matter that is the subject of the
injunction will proceed in an expedited manner to a resolution by the
arbitration panel appointed to hear the matter.
A. The Authority of the Court to Grant Injunctive Relief While an
Arbitration Is Pending.
The defendants argue that the Federal Arbitration Act (the "FAA"),
9 U.S.C. § 1-307, requires us to stay this action pending the outcome
of the arbitration before the NASD panel. They rely on section 3 of the
FAA which requires a federal court to refer a case to arbitration if the
parties have agreed to do so.
We disagree. Although some circuits have ruled that the FAA requires
that a case be sent directly to arbitration, see, e.g., Merrill Lynch v.
Hovey, 726 F.2d 1286 (8th Cir. 1984), the Third Circuit has held that a
court can grant preliminary injunctive relief under the FAA pending
arbitration. See Ortho Pharmaceutical Corp. v. Amgen, Inc., 882 F.2d 806
(3d Cir. 1989). Indeed, NASD Rule 10335(g) recognizes the right of a
party to seek preliminary injunctive relief from a court rather than from
an arbitrator. In these circumstances, the court should also not simply
exercise its discretion to stay the case, as the defendants suggest, and
send the dispute to arbitration. Instead, it should exercise its
B. The Merits of Merrill Lynch's Motion for Preliminary Injunctive
Initialiy, we must address the plaintiffs argument that, because the
defendants contractually agreed to injunctive relief if they violated the
terms of their agreements, we must grant that relief if breaches are
As cited by the plaintiff, there is authority for this position. See,
e.g., Merrill Lynch v. Dutton, 844 F.2d 726 (10th Cir. 1988). However, we
disagree. We believe that contractual language cannot dictate to the
court whether it will issue injunctive relief. See Dice v. Clinicorp.,
Inc., 887 F. Supp. 803 (W.D.Pa. 1995); Merrill Lynch v. Bennert,
980 F. Supp. 73, 76
(D.Me. 1997). Thus, we will rely on the traditional standard for granting
The traditional four-factor test for the grant of a preliminary
injunction is as follows:
(1) the likelihood that the plaintiff will prevail on
the merits at the final hearing; (2) the extent to
which the plaintiff is being irreparably harmed by the
conduct complained of; (3) the extent to which the
defendant will suffer irreparable harm if the
preliminary injunction is issued; and (4) the public
New Jersey Hospital Ass'n v. Waldman, 73 F.3d 509, 512 (3d Cir. 1995).
"The injunction shall issue only if the plaintiff produces evidence
sufficient to convince the district court that all four factors favor
preliminary relief." Id. at 513 (quoted case omitted). Thus, a "plaintiffs
failure to establish any element in its favor renders a preliminary
injunction inappropriate." NutraSweet Co. v. Vit-Mar Enterprises, Inc.,
176 F.3d 151, 153 (3d Cir. 1999).
The Third Circuit has also stated a fifth factor that the court should
consider, "the possibility of harm to other interested persons from the
grant or denial of the injunction." Ortho Pharmaceutical Corp. supra, 882
F.2d at 812-13. See also Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86,
91 (3d Cir. 1992); Bradley v. Pittsburg Board of Education, 910 F.2d 1172,
1175 (3d Cir. 1990).
1. Likelihood of Merrill Lynch Prevailing on the Merits.
Merrill Lynch argues that it has a reasonable likelihood of prevailing
on the merits because Pennsylvania enforces restrictive covenants against
former employees who try to use their previous employer's customer
lists. The plaintiff cites John G. Bryant Co., Inc. v. Sling Testing
& Repair, Inc., 471 Pa. 1, 369 A.2d 1164 (1977). In that case, the
Pennsylvania Supreme Court gave its rationale for enforcing these types
The covenant seeks to prevent more than just the
sales that might result by the prohibited contact but
also the covenant is designed to prevent a disturbance
in the relationship that has been established between
appellees and their accounts through prior dealings.
It is the possible consequences of this unwarranted
interference with customer relationships that is
unascertainable and not capable of being fully
compensated by money damages.
471 Pa. at 8, 369 A.2d at 1167.
Merrill Lynch also cites Merrill Lynch v. Masri, 1996 WL 283644
(E.D.Pa.), which found that Merrill Lynch had a likelihood of success on
the merits in enforcing its restrictive covenants in that case. In doing
so, the court relied on cases from other jurisdictions that have enforced
restrictive covenants on behalf of Merrill Lynch against former brokers.
See Merrill Lynch v. Bradley, 756 F.2d 1048 (4th Cir. 1985); Merrill
Lynch v. Salvano, 999 F.2d 211 (7th Cir. 1993); Merrill Lynch v. Dutton,
844 F.2d 726 (10th Cir. 1988); Ruscitto v. Merrill Lynch, 777 F. Supp. 1349
(N.D.Tex. 1991); and Merrill Lynch v. Hagerty, 808 F. Supp. 1555
(S.D.Fla. 1992). Additionally, Merrill Lynch points to a number of
unpublished dispositions from various federal and state courts that have
reached similar conclusions.
In opposition, the defendants argue that the issue of permanent
injunctive relief will be finally settled by the arbitrators and, they
maintain, under "well developed principles of arbitral decision (sic) in
the securities employment area" (opposition brief at p. 14), arbitrators
routinely refuse to enforce contractual provisions like Merrill Lynch's.
Thus, because Merrill Lynch will not likely succeed in the arbitration,
the defendants contend we should find in their favor on this factor. See
Merrill Lynch v. McCullen, 1995 WL 799537 at *2 (S.D.Fla.).
We reject this position for two reasons. First, we must evaluate the
first factor against the controlling law, not what the
arbitrators may do. Second, Merrill Lynch has supplied us with arbitral
decisions in which its contractual provisions were enforced, so citation
to opposing decisions does not assist the defendants.
The defendants next argue against likelihood of success on the merits
that NYSE Rule 412 and NASD Rule 11870 establish that Merrill Lynch's
restrictive covenants are illegal. (As noted above, these rules require
brokerages to promptly honor customers' requests to transfer their
accounts to another brokerage.) We disagree with this interpretation of
these rules. They operate between the brokerage and its customers, not
the brokerage and its employees.
The defendants finally argue that industry practice and custom ignores
these restrictive covenants and that even Merrill Lynch has recruited
brokers in violation of these obligations. The difficulty with this
position is that it says that widespread violation of the law justifies
ignoring it. To the contrary, we must apply the law to the case at hand,
which in Pennsylvania enforces restrictive covenants. See Merrill Lynch
v. Ran, 67 F. Supp.2d 764, 775 (E.D.Mich. 1999) ("Such an offensive
industry practice is not grounds for refusing to enforce the valid
restrictive covenants at issue here, however distasteful the court finds
the untoward business practices of the brokerage firms."). Thus, we need
not, and cannot, concern ourselves with other situations.
We agree with Merrill Lynch's position and conclude that it has
satisfied the first requirement for a preliminary injunction.
2. Irreparable Injury.
Merrill Lynch argues that it will suffer irreparable injury on three
grounds if the preliminary injunction does not issue. The first ground is
that damages from the loss of its customers is incalculable so an
injunction is required.
There is support in the case law for this position, as Merrill Lynch's
citations show. In Merrill Lynch v. Masri, 1996 WL 283644 (E.D.Pa.),
citing John G. Bryant Co., supra, the court, in issuing a preliminary
injunction against an ex-broker for Merrill Lynch, noted that
interference with customer relations was unascertainable in damages. As
also stated in Merrill Lynch v. Stidham, 658 F.2d 1098 (5th Cir. 1981):
The injury here is such that damages could not
adequately compensate. Were defendants permitted by
the law to exploit the clientele of their former
employers, every investment that reasonably flowed
from the exploitation should be included in the
damages award. How such a figure could be arrived at
Id. at 1102 n. 8.
We agree with this position, although we recognize that the defendants
have cited authority to the contrary. See Merrill Lynch v. Bishop,
839 F. Supp. 68, 74 n. 5 (D.Me. 1993) (damages from lost securities
customers were ascertainable by looking at account histories). See also
Merrill Lynch v. McCullen, 1995 WL 799537 at *3 (S.D.Fla.).
Merrill Lynch's second ground of irreparable injury is that its
customers will lose trust and confidence in it if they discover that
ex-employees have divulged to others private financial information like
account value, market transactions and investment assets. Some courts
have accepted this ground. In Merrill Lynch v. Kramer, 816 F. Supp. 1242,
1247 (N.D.Ohio 1992), the court stated:
Plaintiffs argue with equal strength that
irreparable and immeasurable harm lies in the fact
that Merrill Lynch clients, when they discover that
their financial information, market transactions, and
investment assets which they presumed were held in
confidence have been disclosed, will lose trust and
confidence in Merrill Lynch.
In Merrill Lynch v. Zimmerman, 1996 WL 707107 at *2 (D.Kan.), the court
stated that a TRO was justified because otherwise ("the plaintiff will
lose good will from
certain clients when they discover that their supposedly confidential
information was stolen"). See also Merrill Lynch v. Barnett, 1990 WL
308428 at *4-5 (W.D.Mich.) (quoting Merrill Lynch v. Hess, No. 88-160
(M.D.Pa.) (Herman, J.)) Indeed, as the plaintiff points out, this round
or some variation on it, was accepted by the undersigned in an
unpublished memorandum in Merrill Lynch v DeBord, No. 1:CV-90-1260
(M.D.Pa July 10, 1990) (Caldwell, J.).
We recognize that certain clients do not consider the defendants'
conduct a breach of confidence, but others very well might Thus, we
accept this second ground as a valid basis for claiming irreparable
Merrill Lynch's third ground for irreparable injury is that if an
injunction does not issue, the plaintiffs stability will be threatened
because its competitors will be encouraged to induce other Merrill Lynch
employees to breach their Merrill Lynch employment agreements. See
Kramer, supra, 816 F. Supp. at 1242; Merrill Lynch v. Patinkin, 1991 WL
83168 at *6 (N.D.Ill.) (extending a TRO because the failure to do so
"would leave Merrill Lynch vulnerable to the same conduct from other
employees. Hence, the potential harm [Merrill Lynch] faces, on several
levels, is enormous.") (brackets added) (footnote omitted); Zimmerman,
supra, 1996 WL 707107 at 2.
We reject this argument because under Third Circuit law:
[M]ore than a risk of irreparable harm must be
demonstrated. The requisite for injunctive relief has
been characterized as a "clear showing of immediate
irreparable injury," or a "presently existing actual
threat; [an injunction] may not be used simply to
eliminate a possibility of a remote future injury. . . ."
Acierno v. New Castle County, 40 F.3d 645
, 655 (3d Cir. 1994) (quoted
case omitted). Merrill Lynch presented no evidence that it would suffer
immediate irreparable injury from other brokers leaving if these
defendants were not enjoined.
Nonetheless, based on the first two grounds, Merrill Lynch has
satisfied the second requirement for a preliminary injunction.
3. The Extent to Which the Defendants Will Suffer Irreparable Harm if
the Preliminary Injunction Is Issued
This third factor requires us to balance the irreparable harm to the
defendants against the irreparable harm to Merrill Lynch. See Pappan
Enterprises Inc. v. Hardee's Food Systems, Inc., 143 F.3d 800
, 805 (3d
At the preliminary-injunction hearing and in pre-hearing affidavits,
the defendants asserted they and their families would suffer financial
harm if the defendants could not work for their clients. They also
mentioned damage to their professional reputations.
We do not view either of these as irreparable injury. We fail to see
how the defendants reputations will suffer if they have to abide by
routine restrictive covenants in their employment agreements.
Additionally, any injunctive relief we grant will only be temporary until
the arbitrators decide the issue of permanent injunctive relief.
In these circumstances, the irreparable injury to the plaintiff easily
outweighs any injury to the defendants. Further, as Merrill Lynch points
out, citing Kramer, supra, 816 F. Supp. at 1248, the defendants can work
for Prudential, as long as they do not solicit Merrill Lynch customers.
Moreover, the injury to the defendants was self-inflicted. Realizing
that Merrill Lynch would probably try to enforce its employment
contracts, they breached them anyway. Pappan Enterprises, supra, 143 F.3d
at 806 ("The self-inflicted nature of any harm suffered by [the
defendants] . . . weighs in favor of granting preliminary injunctive
relief.") (brackets added); Ran, supra, 67 F. Supp.2d at 779 ("In
considering the hardships to all involved, however, those suffered by
defendants are the least
deserving of the court's consideration as their travails were needlessly
4. The Public Interest.
Among other matters dealt elsewhere in this memorandum, the plaintiff
argues that an injunction would serve the public interest by enforcing
valid contractual provisions dealing with restrictive covenants.
Conversely, the defendants argue that denial of an injunction would serve
the public interest by preserving the public's right to maintain special
relationships of trust and confidence.
These are merely abstract interests in seeing that the law is
followed. Such interests are not sufficient in the Third Circuit to
satisfy the fourth factor, either for or against an injunction. See
Continental Group, Inc. v. Amoco Chemicals Corp., 614 F.2d 351, 357-58
(3d Cir. 1980); Armstrong World Industries, Inc. v. Allibert, 1997 WL
793041 at *18-19 (E.D.Pa.).
5. The Possibility of Harm to Other Interested Persons
From the Grant or Denial of the Injunction.
Merrill Lynch argues that the harm to other persons is less than the
harm it would suffer if the injunction were not granted. Specifically,
the plaintiff maintains that a preliminary injunction would protect its
investment, good will, reputation, trade secrets, methods of business
operation and contract rights.
In opposition, the defendants argue that Merrill Lynch has ignored the
harm to the customers they serviced while employed by Merrill Lynch. The
defendants assert the harm to these clients would be substantial because
the clients would be unable to work with brokers with whom they have
developed a trusting relationship for their financial holdings.
Conversely, Merrill Lynch would suffer almost no injury since it is a
large brokerage company that could withstand the financial effect of
losing these customers.
The most difficult part of deciding this motion has been weighing the
impact on the innocent customers of the defendants' decision to breach
their employment agreements. Two considerations are significant here.
First, as noted, securities customers often develop a trusting
relationship with their brokers and the clients consider this
relationship irreplaceable. Second, the rules of the NYSE and NASD
provide that a customer can direct a brokerage to transfer his or her
account to another institution.
Nevertheless, the harm to these interested third parties does not
outweigh the harm to Merrill Lynch. We reach this conclusion for three
reasons. First, our injunction is only temporary and will last only until
the arbitrators finally decide the issue of permanent injunctive relief.
See Ran, supra. 67 F. Supp.2d at 780. Second, our decision does not mean
that the customers' assets are frozen. They can still consult with
Merrill Lynch or another brokerage besides Prudential as to what
transactions to make in their accounts to meet market conditions. Third,
refusing to vacate the current order serves the overall purpose of a
preliminary injunction by maintaining the status quo. Favia v. Indiana
University of Pennsylvania, 7 F.3d 332, 842 (3d Cir. 1993). In turn
maintaining the status quo will allow the arbitration panel to provide
orderly relief. See Ran, supra, 67 F. Supp.2d at 780 (noting that it
would not make sense to allow transfers that may be rescinded by an
arbitral ruling and that the status quo should prevail).
We note that other courts have sided with the brokerage company on this
issue, as part of the public-interest factor. See Masri, supra, 1996 WL
283644 at *5 (Merril Lynch's interest in its business investments and
confidential customer information outweighed the "consumers' interest in
dealing with a financial consultant of their choice"); Orbach v. Merrill
Lynch, 1994 WL 900481 at *7 (E.D.Mich. 1994) (the temporary harm to
former clients from not being able to consult with their brokers is
outweighed by other factors
counseling in favor of injunctive relief (quoting Krammer, supra).
We will issue an order continuing the injunctive relief against the
defendants set forth in our TRO. We see no reason to modify the relief to
take into account the differing language between Rodgers and Bowen's
agreements and Igo's. And since the only relief sought in this action was
preliminary injunctive relief, we will close this file.
AND NOW, this 4th day of November, 1999, upon consideration of the
plaintiffs motion for preliminary injunctive relief, it is ordered that
all outstanding motions in this case are dismissed as moot.
IT IS FURTHER ORDERED AND DECREED THAT:
1. Plaintiffs request for a preliminary injunction is hereby granted
according to the following terms:
2. A preliminary injunction order shall issue immediately and the
security previously posted by Merrill Lynch in support of the court's
temporary restraining order, dated October 18, 1999, shall remain in full
force and effect;
3. Defendants are enjoined and restrained. directly and indirectly, and
whether alone or in concert with others, including any officer, agent,
representative, and/or employee of defendants' new employer. Prudential
Securities Incorporated, from:
a) soliciting any business from any client of Merrill
Lynch whom defendants served or whose name became
known to defendants while in the employ of Merrill
Lynch and, further, from accepting any business or
account transfers from any of said customers whom
defendants have solicited at any time in the past for
the purpose of doing business with defendants' new
employer, Prudential Securities Incorporated
(excluding members of defendants' immediate families
and any customers serviced by defendants Rodger and/or
Bowen who reside more than one hundred (100) miles
from the York, Pennsylvania office of Merrill Lynch);
b) using, disclosing or transmitting for any purpose,
including solicitation of said clients, the
information contained in the records of Merrill
4. To the extent not already done so pursuant to the court's order of
October 18, 1999, defendants, and anyone acting in active concert or
participation with defendants who receives actual notice of this order,
including any agent, employee, officer or representative of defendants'
present employer, Prudential Securities Incorporated, are further ordered
to return to Merrill Lynch's York, Pennsylvania office any and all
information pertaining to Merrill Lynch clients whether in original,
copied. computerized, handwritten or any other form, and to purge such
information from their possession, custody or control, within twenty-four
(24) hours of service of this order upon defendants or their legal
5. This order shall remain in effect in full force until a final
decision is rendered by a three-member panel of arbitrators duly
appointed in accordance with the Code of Arbitration procedure of the
National Association of Securities Dealers.
The parties are directed to proceed regarding all matters concerning
the terms of this order in an expedited arbitration before a duly
appointed panel of arbitrators in accordance with Section 10835(g) of the
NASD Code of Arbitration procedure.
6. The clerk of court shall close this file.