August 13, 2021
Two bank-based brokers taken to court docket in latest months following their departures from J.P. Morgan Securities have been restrained from soliciting former purchasers, based on filings in federal court docket in Kentucky and Illinois.
Each instances underscore an ongoing authorized effort of J.P. Morgan to defend its flanks when departing brokers and comply with a raft of comparable instances this yr.
In the latest case, a former personal consumer advisor in Louisville, Kentucky, who the agency had accused of engaging former purchasers to hitch him at Cetera Advisor Networks shortly reached a stipulation with the financial institution on Friday during which he’ll chorus–for now–from additional solicitations.
J.P. Morgan had claimed that the dealer, Matthew S. Kittell, improperly solicited his former purchasers upon becoming a member of Commonwealth Capital Administration, an unbiased apply affiliated with the Cetera unbiased broker-dealer, based on filings in U.S. District Court docket in Western Kentucky.
Kittell, who had dealt with $85 million in consumer belongings for 144 households, resigned from J.P. Morgan on July 30 and started calling purchasers that very same day to debate transferring their accounts to his new agency, based on the criticism. J.P. Morgan stated Kittell managed to solicit “greater than a dozen purchasers” and had continued calling purchasers in violation of his employment agreements, which contained non-solicitation and confidentiality provisions.
J.P. Morgan had claimed that Kittell, past simply asserting his transfer, had referred to as former purchasers requesting conferences or encouraging them to convey their accounts over to his new agency–in some instances sending “paperwork, proposals and different data” about investing with Cetera/Commonwealth.
J.P. Morgan additionally alleged that Kittell promised his former purchasers “extra funding choices and decrease charges” than J.P. Morgan might present, and that he first focused the “bigger” purchasers he previously serviced with presents of discounted charges and that he could have taken buyer contact data to succeed in out to his former purchasers.
Kittell “denies the allegations that he misappropriated any commerce secret or confidential data and that he breached his settlement with JP Morgan Chase,” the dealer’s Louisville-based lawyer, Kevin Norris, stated in an announcement.
“The stipulation doesn’t admit to any of these allegations, however is meant to shift the matter over to FINRA arbitrators for remaining decision,” Norris stated.
Kittell had introduced “solely a handful” of purchasers with him to J.P. Morgan, the place he labored as a part of Chase Wealth Administration, the agency stated. These 22 pre-existing relationships, amounting to $13.eight million in belongings on the time of Kittell’s resignation, weren’t included in a non-solicitation restriction in his employment settlement, the agency stated.
Kittell, whose brokerage profession started at Merrill Lynch in 1998, joined Ameriprise Monetary Providers in 2009 and had been with Chase Funding Providers for lower than a yr earlier than altering over to J.P. Morgan Securities in 2012, based on his BrokerCheck report.
J.P. Morgan made many related allegations final month in a separate bid to halt one other ex-private consumer advisor’s alleged poaching of former purchasers. In that case, the financial institution persuaded a federal choose in Illinois to grant its request for a brief restraining order blocking the 12-year dealer from wooing purchasers to hitch him at Morgan Stanley.
On July 16, the choose granted J.P. Morgan’s request so the dealer in that case, John J. Mullarkey, who in Could left J.P. Morgan Securities for Morgan Stanley in Oak Brook, Illinois, was restrained from soliciting former purchasers.
J.P. Morgan accused Mullarkey of engaging greater than a dozen purchasers with a collective $18 million in belongings following his Could 28 resignation. He allegedly referred to as former purchasers to debate account transfers and tout a lot of “alternatives and new and totally different merchandise at Morgan Stanley,” in some instances contacting these purchasers with “repeated and undesirable calls,” based on J.P. Morgan’s July 14 criticism filed in U.S. District Court docket in Northern Illinois.
Mullarkey had served about 290 J.P. Morgan purchasers, a majority of whom have been “pre-existing” purchasers of the financial institution, with about $157 million in belongings, based on the criticism.
The TRO prohibited Mullarkey from soliciting extra purchasers whereas J.P. Morgan’s case proceeds via Finra arbitration.
A spokeswoman for J.P. Morgan declined to touch upon both of the instances. A spokesman for Cetera declined to touch upon Kittell’s case, citing firm coverage to not touch upon authorized issues, whereas a spokeswoman for Morgan Stanley additionally declined to touch upon Mullarkey’s case.