March 4 (Bloomberg) -- Merrill Lynch & Co., now a unit of Bank of America Corp., sued Deutsche Bank AG, after Germany’s biggest bank hired Eric Heaton last month in what Merrill called a raid of bankers from its financial-institutions group.

Merrill, in a complaint filed yesterday in New York State Supreme Court in Manhattan, said Heaton, the company’s former treasurer who resigned Feb. 3, failed to give the required six- months’ notice and violated non-compete agreements prohibiting him from working for another bank until after Jan. 31, 2010.

Deutsche Bank “raided” the Merrill unit’s senior bankers, including Heaton and 11 others, “many months in advance” and all 12 quit on the same day, Merrill said in the complaint.

“The investment banking group lured away by Deutsche Bank generated tens of millions of dollars in annual revenues for Merrill Lynch,” the Bank of America unit claimed in the suit. “It is readily apparent that Deutsche Bank conspired with one or more of Merrill Lynch’s departing employees,” including Heaton, who Merrill claims intends to violate non-compete covenants he agreed to with his former employer.

John Gallagher, a spokesman for Deutsche Bank, said he didn’t have an immediate comment.

$100 Million Damages

Deutsche Bank, based in Frankfurt, said Feb. 3 it had hired six senior Merrill bankers, including Heaton and his brother, David Heaton, previously Merrill’s head of global asset management investment banking. The bank also hired Richard Slimmon, formerly with the European financial institutions investment banking group, and Richard Gibb, the former head of the financial sponsors group for Asia and the Pacific. They aren’t named as defendants in the suit.

The suit includes claims that Deutsche Bank interfered with employee contracts and misappropriated trade secrets. The unit of Charlotte, North Carolina-based Bank of America claims that Eric Heaton had “highly proprietary information” about its “business operations, liquidity, funding sources, clients and corporate strategies.”

Merrill is also asking a New York Supreme Court judge to issue an order barring Heaton from working for Deutsche Bank through Jan. 31, 2010, according to terms of a contractual agreement it had with him, the firm said.

“Merrill is seeking $100 million in damages suffered in the event that we prove there has been a breach of duty of loyalty and fiduciary duty,” Jack A. Gordon, a lawyer for Merrill, said in a telephone interview.

Confidential E-Mails

Heaton “possessed confidential and exceptionally sensitive information about the bank and its customers at its very highest levels, that are now shared by Deutsche Bank and would create excessive damage to Merrill Lynch,” Gordon said.

Merrill claims Deutsche bank planned a raid on a “a key and very profitable Merrill Lynch business unit” months in advance, noting in published interviews Deutsche Bank officials were cited as saying, “we have had a historical coverage gap in the U.S. depository institutions sector,” and “we’ve been focused on building a team in this space for some time.”

Resignations from Heaton’s group came at such a “rapid clip that at least one Merrill Lynch employee tried to give notice of his resignation before another of the employees even had finished giving notice himself,” Merrill said in the complaint.

“The misuse of this confidential information, especially combined with Deutsche Bank’s simultaneous raid of 12 key Merrill Lynch employees, would inflict tremendous damage on Merrill Lynch, all to the direct benefit of Deutsche Bank,” Merrill said in the complaint.

March Hearing

New York State Supreme Court Eileen Bransten in Manhattan scheduled a March 16 hearing on Merrill’s request for a court order, Gordon said. Deutsche Bank has agreed to defer the hiring of Heaton for 90 days until the judge could rule on the case, the lawyer said.

While Eric Heaton was named as a defendant in the suit, the 11 other former Merrill bankers hired last month by Deutsche Bank weren’t named.

David Heaton allegedly e-mailed “highly proprietary information to his personal e-mail address” on Jan. 23, about 10 days before giving notice, Merrill said in the complaint. David Heaton also e-mailed to his personal address a memo prepared by Bank of America’s counsel, K&L Gates, “concerning an investment banking deal,” the firm said. David Heaton couldn’t be immediately reached for comment.

John Gallagher, a spokesman for Deutsche Bank, said he didn’t have an immediate comment.

The case is Merrill Lynch & Co. v. Deutsche Bank AG, 600661/2009, filed in New York State Supreme Court (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net.

Last Updated: March 4, 2009 17:08 EST