Fidelity Brokerage Services has sued a former financial consultant for allegedly taking trade secrets from the Scarsdale office to poach customers for a new employer.
Before Nicholas Ruiz left Fidelity in November he had access to exclusive information on 270 clients with more than $350 million in assets, according to the lawsuit filed on April 21 in federal court in White Plains. The lawsuit also names his new employer, Citigroup Global Markets.
Ruiz did not respond to a message left on a phone line listed to his Bronx address. A spokesman for Citigroup, Drew Benson, declined to comment.
Fidelity describes its confidential customer information as a crucial aspect of a “lead-based” system. Its financial consultants do not make cold calls to people with whom the company has no relationship. Instead, they are expected to develop relationships based on the leads the company provides.
Ruiz promised to use Fidelity trade secrets only on behalf of the company, when he was hired in October 2013, and to return all company property when he left and to not solicit any customers or prospects for a year after leaving.
Fidelity assigned Ruiz a list of clients who had at least $250,000 in assets, according to the lawsuit, and gave him access to their personal and financial information.
He resigned on Nov. 11, 2016, and submitted a letter to Scarsdale resident Manager Bob Dazi, pledging that he was not taking any client information.
“I trust there should be no legal issues regarding my resignation,” he wrote.
He went to work for Citigroup in Norwalk, Connecticut, according to the Financial Industry Regulatory Authority.
Fidelity began hearing that Ruiz was contacting former customers.
One customer told Fidelity that Ruiz called him on his personal cellphone. He was concerned that Ruiz may have taken confidential information to a new firm, the lawsuit states, and felt that his privacy had been invaded.
Fidelity sent Ruiz and Citigroup a cease and desist letter.
“We have no information to support the notion that Mr. Ruiz has used Fidelity’s confidential customer information to solicit his former clients,” a Citigroup lawyer responded in January.
Ruiz deleted all Fidelity contract information from a personal electronic device before joining Citi, according to the letter.
“As you know,” the lawyer wrote, “it is not uncommon for former clients to proactively contact a broker at their new firm.”
In April, a former Ruiz client told Fidelity that he had tried to convince her to transfer her account to Citigroup.
Fidelity officials believe the only way Ruiz could have known how to contact former customers was by using Fidelity’s secret customer data.
Fidelity sued Ruiz for breach of contract and sued Ruiz and Citigroup for misappropriation of trade secrets and unfair competition.
It is asking the court to order Ruiz and Citigroup to stop using Fidelity information, return all records and stop soliciting Fidelity customers that Ruiz served or whose names he knew from working there.
Fidelity also wants the court to direct everyone to go to arbitration by the Financial Industry Regulatory Authority.