J.P. Morgan Securities LLC was denied a temporary restraining order against a former private client advisor in Louisiana who the company said breached his contract by soliciting clients when he moved to Ameriprise Financial Services last month.

On Tuesday, a judge in a federal court in Louisiana denied a restraining order and deferred an injunction against Stephen C. Smith Jr., who worked in a Baton Rouge branch office of J.P. Morgan Chase Bank. J.P. Morgan said Smith aggressively courted its clients by contacting them via cell phone, including in one case on a weekend, and sent them transfer paperwork they had not requested nudging them to move their accounts to Ameriprise. So far, J.P. Morgan said, Smith has walked off with $30 million and 50 client households. At the time of his March 18 departure from the firm, he served 218 client households with J.P. Morgan, and serviced some $140 million in assets under management.

“More than a dozen clients have informed JPMorgan that [Smith] called them, either prior to his departure from JPMorgan (as early as the week of March 7) or almost immediately upon resigning from JPMorgan, and asked the clients to meet with him at his new office at Ameriprise to discuss doing business or outright asked the clients to transfer their business to him,” the complaint says.

One client, said the J.P. Morgan complaint, informed the firm that Smith “called them on March 19, a Saturday morning, and let them know that he had resigned and asked if the client would move their account to Ameriprise. The client informed J.P. Morgan that they were caught off guard and unnerved and initially said yes. The client informed J.P. Morgan that defendant told the client that a representative from Ameriprise would contact the client in the next 20 minutes (which they did) to get the client’s information and send a DocuSign for the transfer. The client informed JPMorgan that after they took some time to consider the decision, they became upset about making the decision so quickly and giving their information to the representative from Ameriprise, a stranger, over the phone.”

The restraining order was filed in U.S. District Court for the Middle District of Louisiana. While the parties in such cases are subject to arbitration by the Financial Industry Regulatory Authority, brokerages can seek out injunctive relief through the courts while the arbitration cases are pending, as this one is. J.P. Morgan claims Smith violated non-solicit and confidentiality provisions in his contract.

The request for a restraining order was filed on April 11. The next day, Smith’s attorneys filed a memorandum opposing the order, saying that J.P. Morgan’s filing was frivolous and meant to frighten advisors away from leaving the firm.

“As the evidence will show, [Morgan] did not file this action because it believes defendant actually engaged in any misconduct. To the contrary, [Morgan] files a nearly identical case against almost every employee that dares to resign,” Smith’s filing said. “J.P. Morgan and its counsel in this case have a pattern and practice of filing frivolous applications for injunctive relief to inhibit competition—it did so very recently in J.P. Morgan Securities, LLC v. Ryan Riley … which was summarily denied after it was filed in an eerily similar manner with no specific factual allegations.”

In Tuesday's denial of the restraining order against Smith, the court said that, because the facts of the case were disputed, J.P. Morgan "has not shown a substantial likelihood of success on the merits."

A restraining order was also denied in the case of another departing J.P. Morgan advisor, Taulant Cela, who left for Wells Fargo in February. However, J.P. Morgan filed an appendix showing that since 2009 the firm has filed 28 cases where the order was granted.

A search of federal court documents shows that J.P. Morgan has filed 10 restraining orders in the past two years (around the onset of Covid-19).

First « 1 2 3 » Next