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J.P. Morgan Sues Five Former Advisors for Soliciting Clients

The bank filed a complaint in federal court alleging that the former employees resigned earlier this month and have attracted 48 clients with about $59 million in assets.

J.P. Morgan Securities is claiming in a lawsuit that five former employees violated nonsolicitation agreements by enticing clients to join them at their new firm. According to the suit, the employees have already attracted 48 clients with about $59 million in total client assets.

The complaint, which was filed in Illinois federal court earlier this week, alleges that Scott Cimo, John Goblet, John Searer, Brian Bellot and Raymond Kermend all resigned their positions as private client advisors at J.P. Morgan earlier this month to join Professional Wealth Advisors (PWA), an LPL Financial team with several offices in Illinois.

A federal judge granted a temporary restraining order against the advisors, ordering that they must restrain from soliciting or attempting to solicit any J.P. Morgan client they worked with or knew about because of their work at the firm, as well as from using, or disclosing J.P. Morgan "documents, materials and/or confidential and proprietary information."

The five former employees worked out of JPMorgan Chase branches and were allegedly referred bank clients, thus were not expected to cold call potential clients or build up a client base independent from the bank’s referrals, according to the complaint. J.P. Morgan claimed that about one-quarter of the clients served by the five former employees had been bank clients for at least 20 years.

Upon becoming wealth advisors, the former employees signed nonsolicitation agreements in which they pledged that they’d maintain confidentiality of certain information, according to the complaint. Additionally, J.P. Morgan argued the advisors agreed to not solicit any J.P. Morgan clients for one year if their employment at the company were to end. 

Though J.P. Morgan belongs to the Protocol for Broker Recruiting, which allows advisors to take certain client information and solicit customers after departing a firm, the protocol does not apply to the firm’s branch-based advisors.

Shortly after the employees left for PWA, J.P. Morgan began hearing that the five advisors were reaching out to clients, according to the complaint. The firm said the defendants encouraged old clients to leave J.P. Morgan, sometimes calling them from private cell phone numbers. In one instance, Cimo allegedly told an unnamed client that their newly assigned J.P. Morgan advisor had “very little experience,” and a separate, unnamed client purportedly told J.P. Morgan that Goblet had made her feel guilty if she decided not to move her accounts. 

Additionally, five days before Goblet resigned, he reportedly accessed J.P. Morgan’s computer system to look at screens for 19 of the top 100 clients he worked with, according to the suit. In one 10-minute period, Goblet opened eight screens of his top 100 clients, in descending order of total assets. On the weekend before Searer resigned, he allegedly opened screens for 48 of his top 100 clients.

“There was no legitimate business reason for Searer to access and view such client information over the weekend on the evening prior to his resignation,” the suit read. “On information and belief, Searer took such information with him from JPMorgan to PWA (by taking photos of such computer screens with his cell phone, or via some other means), and has used such information at PWA to solicit JPMorgan clients.”

But an attorney representing the five defendants asserted that the only access the advisors attained was in the process of their work as J.P. Morgan advisors.

“They did not take confidential information when they left J.P. Morgan,” said John S. Monical of the law firm Lawrence Kamin. “They are not soliciting clients in violation of their agreement and they deny their allegations of the complaint.”

According to J.P. Morgan, the company spent millions on acquiring and maintaining its client base, and argued that the five former employees wouldn’t have had a client base to solicit without this work. Additionally, the advisors had access to J.P. Morgan’s confidential financial records, according to the suit.

“The confidential information that defendants have taken or retained was entrusted to JPMorgan by its clients with the expectation that it would remain confidential and would not be disclosed to third parties,” the suit read. “JPMorgan and defendants are obliged to maintain the confidentiality of this information.”

The complaint follows a similar one filed against a Florida-based advisor earlier this month, where the company alleged the former employee solicited prior clients to join him in his new role at Wells Fargo in violation of his agreement with J.P. Morgan.

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