Bankers Trust sues 4 who left Alex. Brown

Ex-managing directors allegedly conspired with competitor

Legal matters

July 07, 1999|By Robert Little | Robert Little,SUN STAFF

Four former managing directors of Deutsche Banc Alex. Brown are being sued by their former employer for allegedly conspiring with competitor Credit Suisse First Boston to form an investment office in Baltimore.

Bankers Trust Corp., which bought Alex. Brown in 1997 and was acquired by Deutsche Bank AG last month, alleges the four men disclosed trade secrets and helped Credit Suisse First Boston conduct an "employee raid" on Alex. Brown.

A federal judge has denied Bankers Trust's request for a temporary restraining order barring the men from soliciting business from Alex. Brown customers. Banker's Trust also has asked for a preliminary injunction, which is pending.

Attorneys on both sides of the dispute refused to comment yesterday. Edmund Pendleton, vice president for corporate communications for Credit Suisse First Boston, also would not comment.

Four former Alex. Brown managing directors -- Russell T. Ray, Harris Hyman IV, Steven R. Schuh and Stuart F. Smith -- left the company last month to form a health care investing unit for Credit Suisse First Boston. The men oversaw a similar operation for Alex. Brown, which had revenue of more than $100 million last year, according to the lawsuit.

The Credit Suisse First Boston operation is expected to open in Baltimore in several weeks. Besides the four directors, about 30 former employees of Alex. Brown's health care investing division are expected to be employed there, including nine analysts, six sales assistants and several administrative employees.

In the lawsuit, filed last week in U.S. District Court in Baltimore, Bankers Trust alleges that the four men violated their employment agreements with Alex. Brown, which expire at the end of the year.

"While employed by Alex. Brown, defendants secretly planned to leave the employment of Alex. Brown, schemed with others to deprive Alex. Brown of its records, clients and trade secrets and solicited employees of Alex. Brown to join [them] at Credit Suisse First Boston," the lawsuit reads.

It also alleges that employees of Credit Suisse First Boston, with help from the four men, "lured" Alex. Brown employees to a "boiler room" recruitment operation in the Renaissance Hotel.

The lawsuit claims that "Alex. Brown has suffered and will continue to suffer financial loss that is not presently capable of calculation."

Bankers Trust asked the court to bar the men from soliciting Alex. Brown customers and employees, and from using any information about clients that they obtained while employed with Alex. Brown.

Schuh said last night that he could not comment and referred questions to his attorney. Efforts to reach the other men yesterday were unsuccessful.

Pub Date: 7/07/99

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