A FINRA arbitration panel slapped a former Bank of America Merrill Lynch financial advisor with an injunction that will prohibit him from soliciting his former clients until October 2012.

The decision stems from a dispute that first began in a Nevada district court in October, when Merrill Lynch sought a temporary restraining order and preliminary injunction against former advisor Chad R. Sillman.

Merrill Lynch initiated the legal pursuit after Sillman resigned from the firm’s Las Vegas office immediately after the close of business on Friday, Oct. 21 without prior notice, according to court documents. Sillman then immediately went to work at U.S. Bancorp Investments, a firm that is not part of the Broker Protocol.

Both Merrill Lynch and U.S. Bancorp spokespersons declined to comment when reached by phone on Wednesday. Sillman was not immediately available for comment.

The Broker Protocol is an agreement whereby registered representatives who move from one firm to another can take their clients with them under certain guidelines.

In court documents, Merrill Lynch alleged that Sillman misappropriated and was continuing to use the firm’s proprietary information.

In the weeks prior to his resignation, Merrill Lynch claimed, Sillman accessed account statements and personal information for a number of customers. Sillman continued to access Merrill Lynch account information and contact its clients in the weekend immediately following his resignation, Merrill Lynch alleged.

Merrill Lynch subsequently sent a letter to Sillman ordering him to cease contact with their clients, but received no response.

In its court documents, Merrill Lynch alleged that Sillman’s use of client information could harm the firm because of the disclosure of proprietary information, loss of client confidentiality, damage to office stability and other possible economic losses.

Sillman had $43 million in client assets under management that represented hundreds of accounts at Merrill Lynch, according to court filings. He also had more than $400,000 in annual fees and commissions in the 12 months immediately before his resignation.

In response, the Nevada District Court ruled that Merrill Lynch did have the right to a temporary injunction against Sillman while the dispute went to FINRA arbitration proceedings. The court issued a temporary restraining order against Sillman on Nov. 4 and required that he post $500 in security. The court also enjoined both Sillman and U.S. Bancorp from contacting his Merrill Lynch clients or clients whose records he obtained from the firm.

Merrill Lynch initiated arbitration proceedings with FINRA in late October, requesting that Sillman, along with his new employer, be permanently enjoined from using Merrill Lynch’s records to solicit business. Merrill Lynch also requested that the respondents be prohibited from destroying or making the firm’s records unavailable during the proceedings, as well as unspecified compensatory damages.

The respondents, who included U.S. Bancorp and Sillman, responded by asking the arbitration panel to decline awards to Merrill Lynch, provide unspecified awards to them instead, and for Merrill Lynch to reimburse them for attorneys’ fees and other costs resulting from the proceedings.

In a Dec. 15 decision, the FINRA arbitration panel partially granted Merrill Lynch’s request for a permanent injunction by opting instead to forbid Sillman from contacting his former clients until Oct. 21, 2012.

At the same time, the panel determined that Sillman is not prohibited from sending advertisements or mailings, as long as they do not target the individuals he formerly serviced while at Merrill Lynch.

The terms of the decision cannot be extended, the FINRA panel said, and both parties’ requests for compensatory damages were denied.

Lorie Konish writes for On Wall Street.