A federal judge has rejected Merrill Lynch’s request for a temporary restraining order against one of the largest advisory teams to depart the firm in recent years, a group that broke away to establish an independent registered investment advisory practice.
The case, which has drawn intense attention across the wealth management industry, centers on more than 100 advisors who collectively managed $129 billion in assets at Merrill Lynch. The firm filed suit against the team as well as Dynasty Financial Partners, which facilitated the advisors’ transition to independence, and Charles Schwab, the group’s chosen custodian.
Merrill, a unit of Bank of America, alleged that the departure amounted to a “premeditated corporate raid.” The firm accused the advisors of breaching employment contracts, misappropriating trade secrets, and engaging in other misconduct. Merrill sought an injunction that would prevent the team from soliciting their former clients and from disclosing confidential information.
But during a hearing this week, the court declined to issue an emergency injunction. The judge found Merrill’s arguments insufficient to justify such extraordinary relief and directed that the dispute be resolved through arbitration before Finra, the brokerage industry’s self-regulatory body.
“The injunction hearing is only the first step in the litigation process,” Merrill Lynch said in a statement. “We intend to pursue this matter aggressively in arbitration and remain confident that a Finra panel will conclude that the defendants engaged in a coordinated effort to raid our firm and solicit both clients and employees.”
On the other side, Dynasty Financial Partners viewed the decision as a pivotal development for the future of advisor independence. “This is a watershed moment for the wealth management industry,” said Dynasty CEO Shirl Penney. “The ruling underscores the strength and sophistication of the independent channel. The judge found no evidence that the team violated the protocol for broker recruitment.”
That protocol, a longstanding industry agreement, allows advisors to leave one firm for another and take certain client contact information with them, provided both firms are signatories. The court appeared to agree with Dynasty’s view that the team had complied with those rules.
The advisors in question had been based in Atlanta, where they operated as part of Merrill Lynch’s Global Corporate and Institutional Advisory Services group. Their client base included ultrahigh-net-worth individuals, institutional investors, and corporate clients. They were known for advising on complex equity-compensation programs and retirement plans.
The team has now launched OpenArc Corporate Advisory, a new RIA that registered with the SEC on July 8, according to regulatory filings. Their move to independence represents one of the most significant wirehouse departures of the year, both in size and in profile.
Merrill’s lawsuit came swiftly after the team’s exit. In their own filings, the advisors painted a picture of longstanding frustration with the firm, accusing Merrill of neglecting their practice and failing to invest in the business. They argued that the firm’s lack of support had led to “staggering losses of clients” and said Merrill was now attempting to tarnish their reputations in the press.
The advisors also pushed back against the charge of a “corporate raid,” asserting that they had not been recruited by a rival but had instead chosen to launch their own independent practice. That argument appeared to resonate with the judge, who declined Merrill’s bid for a restraining order.
For its part, Charles Schwab rejected the allegations against it, dismissing Merrill’s claims as speculative. “The allegations were not facts but unfounded speculation,” Schwab said in a statement. “We are pleased that the court agreed. Schwab is committed to the highest standards of integrity, and our practices are rooted in fairness, respect for advisor choice, and free competition.”
The case now moves to Finra arbitration, where both sides will present their arguments in more detail. Merrill is expected to maintain its claim that the advisors improperly solicited clients and misused confidential information, while the advisors will continue to argue that their move was both legal and justified by the firm’s neglect of their business.
For advisors across the industry, the case highlights the growing tension between traditional wirehouses and the expanding independent RIA movement. Large-scale departures like this one raise questions about advisor loyalty, client ownership, and the competitive dynamics of the wealth management business.
The size of this particular breakaway team—over 100 advisors with $129 billion in assets—sets it apart from most other departures. While smaller teams have been steadily migrating to the independent space for more than a decade, rarely has a group of this magnitude attempted such a transition all at once. That scale makes the outcome of the Merrill case a critical reference point for both wirehouses and independent RIAs alike.
Dynasty’s role in the transition is also significant. The firm has positioned itself as a key player in helping large teams navigate the complexities of independence, from compliance and technology to custodial relationships. The court’s decision not to impose an injunction suggests that the process followed by Dynasty and OpenArc was, at least in the judge’s view, consistent with industry standards.
Still, the legal battle is far from over. Arbitration through Finra can be a drawn-out process, often taking many months to resolve. Both sides are likely to continue pressing their cases in the media as well as in the arbitration room. Merrill, in particular, faces the challenge of reassuring clients and employees that it can retain and grow talent at a time when the independent model is gaining momentum.
For advisors watching from the sidelines, the ruling reinforces the importance of understanding the broker protocol, employment contracts, and transition planning. As more teams consider independence, the Merrill case demonstrates that careful adherence to the rules can help withstand legal challenges, even from the largest wirehouses.
The case also underscores the evolving role of custodians like Schwab. As independent practices grow in size and sophistication, custodians are increasingly drawn into disputes that were once limited to the wirehouse world. Schwab’s dismissal of Merrill’s allegations reflects the custodian’s broader positioning as a neutral provider committed to supporting advisor choice.
Looking ahead, the OpenArc team will need to prove that independence can not only preserve but expand client relationships at scale. Their ability to maintain service quality, build infrastructure, and grow assets will be closely watched by the industry. Success could inspire more large teams to consider independence, while setbacks could reinforce the view that only smaller groups can make the leap effectively.
For now, the judge’s denial of Merrill’s injunction request is a symbolic win for the independent movement. It suggests that courts may be reluctant to block advisor transitions when teams adhere to established protocols and regulatory processes.
At the same time, the ruling serves as a reminder that legal risk remains high for any team contemplating a move. Employment contracts, client confidentiality, and firm policies all carry weight in arbitration, and wirehouses have historically been aggressive in pursuing litigation.
The battle between Merrill Lynch and OpenArc Corporate Advisory is far from settled. But the first round has gone to the independents, with a court decision that underscores both the opportunity and the complexity of leaving a wirehouse for the RIA channel.
For wealth advisors across the industry, the case is more than just a legal dispute. It is a test of the balance of power between traditional brokerage firms and the independent model. And it may help define the future direction of the wealth management business, where advisor choice, client loyalty, and firm support are all in play.
In that sense, this case is more than just about Merrill, OpenArc, Dynasty, or Schwab. It is about the industry itself, the shifting loyalties of advisors, and the structural forces shaping the wealth management landscape. The outcome in arbitration could influence not only how teams plan future transitions but also how wirehouses respond to the continued momentum toward independence.
For now, the independent movement can claim an early victory. But the next stages of the fight—through arbitration, client retention, and business execution—will determine whether this landmark breakaway becomes a model for the future or a cautionary tale for those who follow.
