A growing number of advisors are now debating whether to defect to other firms, but this high-profile lawsuit suggests they’d better watch what they say about their old brokerages.
JPMorgan is suing six advisors after they jumped ship in February to move over to Morgan Stanley – specifically for what they told clients from their $2 billion book.
“During their solicitation calls to JPMorgan customers, the defendants are making disparaging and defamatory statements about JPMorgan,” the brokerage said in its May 7 complaint. “These statements are false and defamatory and defendants are deliberately seeking to damage JPMorgan's reputation to JPMorgan's clients in order to convince such clients to move their accounts to defendants at Morgan Stanley.”
The Investment News reported that the six brokers handled approximately 400 clients while at JPMorgan generating approximately $15 million in annual revenue.
JPMorgan is especially upset that the brokers allegedly have been telling former clients that their accounts will be handled by a call center in an attempt to get those clients to move their accounts over to Morgan Stanley.
FINRA is currently conducting an arbitration case which will decide what if any financial ramifications the advisors should face for their actions in the move to Morgan Stanley. On board Morgan Stanley since May, the advisors in question are unrepentant suggesting they’ve done nothing wrong.
“I have complied fully with any contractual obligations with regard to alleged “solicitation,” having merely announced my change of employment to the clients,” Michael Pudlak said in a court document.
Pudlak further claims that he took no information from JPMorgan but merely wrote down the names of his 11 largest clients and then found their contact information by Googling their names.
Up here in Canada we don’t have nearly the AUM’s to fight over that they have in the U.S. but it does highlight the need for advisors to be very respectful of the process when moving from one firm to the other.
Otherwise, you might end up in the middle of a lawsuit just as these six advisors find themselves.
“During their solicitation calls to JPMorgan customers, the defendants are making disparaging and defamatory statements about JPMorgan,” the brokerage said in its May 7 complaint. “These statements are false and defamatory and defendants are deliberately seeking to damage JPMorgan's reputation to JPMorgan's clients in order to convince such clients to move their accounts to defendants at Morgan Stanley.”
The Investment News reported that the six brokers handled approximately 400 clients while at JPMorgan generating approximately $15 million in annual revenue.
JPMorgan is especially upset that the brokers allegedly have been telling former clients that their accounts will be handled by a call center in an attempt to get those clients to move their accounts over to Morgan Stanley.
FINRA is currently conducting an arbitration case which will decide what if any financial ramifications the advisors should face for their actions in the move to Morgan Stanley. On board Morgan Stanley since May, the advisors in question are unrepentant suggesting they’ve done nothing wrong.
“I have complied fully with any contractual obligations with regard to alleged “solicitation,” having merely announced my change of employment to the clients,” Michael Pudlak said in a court document.
Pudlak further claims that he took no information from JPMorgan but merely wrote down the names of his 11 largest clients and then found their contact information by Googling their names.
Up here in Canada we don’t have nearly the AUM’s to fight over that they have in the U.S. but it does highlight the need for advisors to be very respectful of the process when moving from one firm to the other.
Otherwise, you might end up in the middle of a lawsuit just as these six advisors find themselves.
