In a recent legal decision, a JP Morgan Securities advisor defeated the firm in a non-solicit action. If you are scoring at home and remember that JP Morgan just announced that they are folding their more traditional wealth management unit into the private banking unity, this is the kind of legal precedent that will resonate with advisors and their counsel looking to get out of dodge.
JP Morgan has never been a protocol firm and has used that particular hammer to attempt to keep advisors tied to their desks. Largely this has been successful, especially within the firm’s private banking unit – where employment contracts include pretty draconian garden leave language as well as non-compete and non-solicit clauses.
Losing a legal battle on the non-solicit battlefield will only embolden the newly displaced JPMS ranks, allowing them to be further induced to seek employment elsewhere.
Here are the particulars of the decision from media reports around the industry:
“The decision supersedes a temporary restraining order that a federal judge in the southern district of Indiana imposed against Erik Weiss in November after J.P. Morgan argued that the broker was aggressively soliciting clients in violation of his employment contracts. Judge Tanya Walton Pratt had ordered Weiss and J.P. Morgan to resolve the bank’s request for a permanent injunction and monetary damages in Finra arbitration.”
“Christopher Hagenow, an Indianapolis lawyer representing J.P. Morgan Securities, notified the Indianapolis court last week that arbitrators had denied the permanent injunction on December 16. His single-sentence notice about the unpublished decision did not elaborate on the status of the bank’s requests for damages and return of confidential data.”
If you lose the non-solicit battle you are going to lose the return of data and damages battle as well. The non-solicit legal bar is the lowest, and easiest to win/enjoin.
The take here should be simple – JPMS brokers are free agents right now. Probably more than half of the meaningfully marketable advisors and their books are up for grabs. Keep a sharp eye on several firms that are being very aggressive in recruiting these guys – Wells Fargo, Morgan Stanley, and Ameriprise. Three firms that were aggressive recruiters throughout 2019.
Oh, and proper securities lawyers are licking their chops at the specter of adding a JP Morgan take-down to their resumes as well.