J.P. Morgan Securities has obtained a restraining order against a financial advisor who left the firm and allegedly took clients with him to a new practice, according to court papers.
J.P. Morgan alleges the action violated the employment contract Daniel Sutton of Tampa, Fla., had with the firm, the court filings said.
The restraining order was issued Friday by U.S. District Court Judge William F. Jung in the Middle District of Florida in Tampa and lasts for 14 days. It will be in place while the case is heard by an arbitration panel by the Financial Industry Regulatory Authority, according to the court order. The restraining order prohibits Sutton from taking any further action regarding the J.P. Morgan clients or the confidential information Sutton took from the firm.
Sutton resigned from his position as a private client advisor for J.P. Morgan Securities on Oct. 2 and subsequently went to work as an independent contractor with Commonwealth Financial Network, according to the court filings.
Lawyers for both sides did not respond to calls for comment.
Prior to his resignation, Sutton, while on vacation, went to a branch office of J.P. Morgan Securities and downloaded confidential information on 49 clients he had served, in order to contact them and inform them of his move, the court papers said. Ten of those clients contacted J.P. Morgan Securities and reported that they had been contacted by Sutton, the lawsuit said.
The information was gathered so Sutton “could solicit J.P. Morgan clients to transfer their accounts from J.P. Morgan to Sutton at Commonwealth in violation of his post-termination-of-employment contractual obligations to J.P. Morgan,” J.P. Morgan said, adding that Sutton took the information “to aid his improper scheme to spirit away J.P. Morgan’s clients.”
The action violated Sutton’s agreement with J.P. Morgan not to solicit any of his J.P. Morgan clients to another practice for one year following his leaving J.P. Morgan Securities employment, the court papers said.
Nine clients formerly served by Sutton at J.P. Morgan Securities transferred their accounts valued at $26 million to him at Commonwealth, according to J.P. Morgan. According to the court filings, Sutton did not bring those clients with him when he started at J.P. Morgan Securities in October 2013, but rather they were assigned to him by the firm.
“Based on industry custom and practice, defendant has likely been promised substantial financial inducements to bring with him as many accounts as he can, regardless of his contractual obligations to J.P. Morgan,” the court filings said.
Dutton's attorney could not be reached for comment.