Thomas B. Lewis, an attorney at Stevens & Lee in Princeton, has been on the opposing side of J.P. Morgan representing several advisors in these cases. He said the cases dwindled a bit after Covid-19 started because the access to courts was limited, but he said the bank has stepped up restraining order filings in the last year.
One of the bank’s biggest wins was when it successfully got a restraining order against a group of four advisors who left J.P. Morgan’s Illinois branch offices last year: Scott A. Cimo, John D. Goblet Jr., John A. Searer, Brian S. Bellot and Raymond P. Kermend worked in various Illinois branch offices, servicing more than 1,000 J.P. Morgan clients with $1.1 billion in assets, the bank said. The five had moved to Professional Wealth Advisors LLC in early April 2021. The Finra arbitration database doesn't show that case as being resolved yet. Cela's case is also ongoing in Finra arbitration. Lewis, who represents Cela, would not comment directly on that case.
Lewis said the success of the cases often turns on whether the departing advisors have merely announced to clients that they are leaving a firm as a professional courtesy—something that the courts usually say is allowable—or began pushing the clients to move by crossing the line in a number of ways.
“If the financial advisor either goes into a sales pitch about why the business should transfer to the new firm or continues on talking about the advantages of moving the accounts out of J.P. Morgan, that could be considered in many situations a solicitation and that would violate the one-year non-solicitation provision that J.P. Morgan has with its financial advisors,” he said.
If the advisor has made a simple announcement and the client asks follow-up questions, that's not seen as solicitation, he said.
While J.P. Morgan says it is still a party to the broker protocol that allows brokers and advisors to move without aggressive litigation, it also says that the protocol does not apply to its bank channel employees. These employees do not do cold calling and were given their entire books of business by the bank as proprietary information, it says.
The following is an oft-repeated statement in the firm's injunctive relief filings: “The substantial majority of the clients Defendant serviced at JPMorgan were assigned to him by JPMorgan or were referred to him by JPMorgan Chase or through other JPMorgan Chase clients.”
Lewis said that advisors can still make an announcement to these clients, however.
“JPMorgan would not take issue if this advisor left with nothing, put together a client list [from] memory and used public source information to find contact information and made a single telephonic announcement as a professional courtesy to alert clients that he or she is no longer at J.P. Morgan,” Lewis said.
Lewis said the cases also hinge on whether it’s a current J.P. Morgan manager filing an affidavit saying that an ex-employee tried to solicit firm clients or whether it’s the clients themselves filing the affidavits. If it’s a manager making the claim, it’s hearsay, Lewis said.