After a ‘smash and grab raid’ on its British business, Swiss bank UBS has recently won a court order temporarily preventing former and departing employees from poaching clients.
The bank accused Vestra Wealth – an investment company set up by former UBS executives – of pursuing a secret campaign to create a separate business using UBS staff and clients.
UBS won the first round of the legal battle in the High Court after Mr Justice Openshaw imposed a temporary restraining order on Vestra.
The judge said UBS had presented a “formidable case”, and pointed to transcripts of correspondence between the defectors as evidence that former senior employees at UBS conspired over several months to convince staff and clients to move to Vestra.
In its defence, Vestra produced 40 e-mails and letters from departing employees voicing their dissatisfaction and concerns with UBS. Yet the judge found the evidence “quite unconvincing” and concluded: “It was far more likely, in my judgement, to be unlawful conspiracy dressed-up as lawful competition.”
The judge added that David Scott – the founder of Vestra – was entitled to recruit former colleagues and to attract UBS clients, but was not permitted to lift an entire client base.
UBS, “devastated” by the loss of 75 employees to Vestra since May, said: “This legal action was to ensure that certain senior departing employees abided by the contractual obligations they agreed to when they joined UBS and to defend UBS’s legitimate business interests.”
Stephanie Dale, head of employment at Stevens & Bolton, commented: “The judge’s decision underscores the potency that restrictive covenants can give to an employer in protecting its business.”
“It is likely that more employers will be looking to include additional restrictions in contracts preventing employees joining together to compete after leaving.”
Vestra was unavailable for comment. A full trial will be held in early October.