August 18, 2021
JPMorgan Chase & Co workplace in New York, NY.
J.P. Morgan has taken Chicago-based advisory agency Cresset Asset Administration to court docket as a part of a long-running authorized dispute over Cresset’s alleged raid and recruitment of at the very least 10 J.P. Morgan personal bankers.
A Might 10 petition by J.P. Morgan Securities and JPMorgan Chase Financial institution in U.S. District Court docket in Northern Illinois alleges that Cresset has didn’t adjust to a subpoena issued final yr for data within the underlying arbitration.
J.P. Morgan had claimed within the January 2019 arbitration that Douglas P. Regan, Cresset co-chairman and former Midwest regional head for J.P. Morgan’s personal financial institution, had solicited recruits–a few of whom he had supervised–from J.P. Morgan after his departure in 2017. The actions violated non-compete clauses in his employment agreements and resulted within the “lack of tens of thousands and thousands of {dollars} in shopper property and substantial income effectively in extra of $75,000,” J.P. Morgan stated in arbitration.
Whereas the financial institution stated it has not tallied the complete extent of the damages it can declare, it famous in arbitration that the staff Cresset, which was based in 2017, efficiently recruited had collectively serviced lots of of shoppers totaling “billions of {dollars} in shopper property.” It additionally stated that Cresset, early in its formation, had targeted on filling its ranks with former J.P. Morgan workers, constituting an “impermissible raid” of its personal financial institution.
Reached on Wednesday, Regan stated that the financial institution’s claims are “with out benefit.”
“We imagine the motion is with out benefit and past that we don’t touch upon litigation issues,” Regan stated.
A Cresset spokeswoman individually declined to remark. Regan is the only real respondent within the arbitration declare, whereas Cresset is the defendant within the court docket motion.
A J.P. Morgan spokesman declined to touch upon the matter.
Cresset, per J.P. Morgan’s model of occasions, had been ordered to look for a preliminary listening to earlier than an American Arbitration Affiliation arbitrator on February 28 of final yr and convey with it sure paperwork requested within the subpoena, in accordance with court docket paperwork. The financial institution stated that Cresset possesses “very important” paperwork and associated data regarding the recruiting and hiring of the previous J.P. Morgan workers that it’s searching for in arbitration.
Cresset countered that the paperwork J.P. Morgan seeks are “overly broad and unduly burdensome” for figuring out whether or not the agency and Regan have been out of bounds in wooing the previous J.P. Morgan workers in query, because the financial institution alleged.
In objecting to a number of iterations of the subpoena, Cresset stated that the “overwhelming majority” of J.P. Morgan’s calls for–for paperwork equivalent to these regarding Cresset’s monetary data, confidential enterprise plans, or compensation preparations with Regan–have been “irrelevant” to the controversy.
Cresset additionally claims J.P. Morgan has didn’t account for greater than 1,500 paperwork and discovery responses–together with from private and company-issued electronic mail addresses–which have already been offered by Regan.
Regan had joined J.P. Morgan in August 2012 and voluntarily terminated his employment efficient Might 30, 2017 to hitch Cresset, which he had helped type in March of that yr, in accordance with J.P Morgan’s criticism.
J.P. Morgan additionally claimed Cresset, in some instances, used a third-party recruiter, who had additionally beforehand labored at J.P. Morgan, and Regan, in different instances, reached out to J.P. Morgan workers instantly in trying to lure them to Cresset.
J.P. Morgan Securities in February 2018 had filed an announcement of declare towards Regan and Cresset earlier than the Monetary Trade Regulatory Authority, the brokerage trade regulator. A panel in November of that yr dismissed the declare with out prejudice, discovering that the events ought to proceed as a substitute to AAA arbitration, in accordance with court docket paperwork.
The AAA arbitration has been stayed pending the court docket’s order regarding Cresset’s compliance with the subpoena, in accordance with J.P. Morgan’s petition.
Whereas the swimsuit and underlying arbitration primarily intention to stave off attrition brought on by worker defections to opponents, the dispute differs from J.P. Morgan’s typical pursuit of short-term restraining orders and injunctions towards advisors on the transfer by focusing as a substitute on the agency and executives doing the recruiting.
Cresset, in the meantime, has continued to attract from J.P. Morgan’s ranks, together with the addition of a four-person J.P. Morgan Personal Financial institution group in Denver, in June.
Total, the RIA has about $14.eight billion in buyer property, in accordance with its web site. It’s a member of the Protocol for Dealer Recruiting, the trade pact that enables brokers to go away with buyer contact data, though J.P. Morgan particularly excludes its personal bankers from the settlement’s authorized protections.