August 30, 2021

A Morgan Stanley dealer whose $7 million staff left J.P. Morgan Non-public Financial institution in Salt Lake Metropolis, Utah this spring has agreed to not contact his former purchasers as J.P. Morgan continues to flex its authorized muscle towards departing bankers.

J.P. Morgan accused Eric T. Smith, who had joined Morgan Stanley’s non-public wealth administration unit on April 1 after a backyard depart, of improperly soliciting “quite a few” J.P. Morgan purchasers to maneuver their accounts to his new agency, in keeping with a Could 17-filed grievance within the third District Court docket of Salt Lake Metropolis. The purchasers at subject had property totaling greater than $100 million, the financial institution claimed.

Below the order, Smith, previously an govt director on the non-public financial institution, is prohibited from straight or not directly soliciting purchasers and utilizing or disclosing any confidential info as outlined by the financial institution’s code of conduct. The beforehand unreported injunction was finalized Could 27 and marks no less than the second time J.P. Morgan has taken a former banker or staff to court docket amid over a dozen departures up to now yr.

The order, which doesn’t prohibit Smith from accepting in-bound calls or working with prospects who’ve already transitioned their enterprise, will stay in impact till a Monetary Business Regulatory Authority arbitration panel guidelines on J.P. Morgan’s request for everlasting injunctive aid and damages, in keeping with the order. As of Monday morning, there was no indication on the court docket docket of a choice in arbitration.

Smith, in addition to his Salt Lake Metropolis-based attorneys, Lara Swenson and Mitchell Stephens, didn’t reply to requests for remark.

The settlement didn’t represent an admission of wrongdoing, and the court docket didn’t make findings or any dedication as to legal responsibility or whether or not Smith had violated his employment agreements, in keeping with the order.

Spokespeople for J.P. Morgan and Morgan Stanley each declined to remark.

Smith, who had began his profession in 2011 at J.P. Morgan, left the non-public financial institution together with managing director Brian R. Swenson, investor affiliate Jesse F. Bohannon, and two help staffers. They oversaw a complete of $2.eight billion, sources mentioned on the time. Not one of the different staff members had been named in J.P. Morgan’s grievance.

J.P. Morgan had accused Smith of reaching out to no less than 9 former purchasers by e mail or telephone, asking to fulfill or transfer their property to Morgan Stanley. The agency additionally claimed that Smith in no less than one occasion advised a former buyer that the J.P. Morgan staff was solely compensated on new cash introduced in and that “service goes downhill” when you’re a shopper.

J.P. Morgan additionally mentioned it believed that Smith had taken confidential shopper info, together with telephone numbers and e mail addresses, which he used to contact prospects.

Smith had served about 54 J.P. Morgan households, “the vast majority of which had been both pre-existing JPMorgan purchasers on the time they had been assigned to Smith, or had been developed by Smith at JPMorgan with JPMorgan’s help,” in keeping with the grievance.

The agency additionally claimed that Morgan Stanley had supplied to Smith “substantial monetary inducements” of greater than $1 million in assured loans and different incentives, so as to entice him to depart the non-public financial institution.

J.P. Morgan’s authorized efforts coincide with what headhunters say is an more and more aggressive marketplace for non-public bankers as Morgan Stanley, UBS Wealth Administration USA and even registered funding advisory corporations vie for these advisors. The salaried banking pool had traditionally been a much less attractive marketplace for conventional corporations given backyard depart necessities, the problem of transferring prospects with deep banking ties and strict one-year buyer solicitation bans.

J.P. Morgan Non-public Financial institution earlier this month obtained an identical non-solicitation settlement from a non-public banking duo who joined UBS in Fort Price, Texas.

The financial institution has additionally been pursuing a years-long arbitration and court docket case towards a Chicago registered funding advisory agency, Cresset Asset Administration, and a senior govt over its “raid” on bankers.

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