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IN THE NEWS: J.P Morgan Sues Former Advisor Team

Posted on July 13th, 2015 | Author: David T. Harmon

I was recently interviewed by Fundfire, a financial services industry on-line publication, regarding a Morgan Stanley financial advisor team that was sued by their former employer, J.P. Morgan, after they jumped ship to Morgan Stanley earlier this year. J.P. Morgan has alleged breach of contract, misappropriation of trade secrets and unfair competition among others.

Last year, J.P. Morgan became a signatory to the Protocol for Broker Recruiting, an industry agreement that typically supersedes the non compete and non solicit clauses contained in contracts advisors sign with firms, allowing them to retain basic client information and contact clients should they switch firms. J.P. Morgan signed the Protocol subject to a limited joinder, which specified that the Protocol’s protections would not apply to bank advisors, only to advisors in the legacy Bear Stearns brokerage division.

As I stated in the Fundfire interview, this case boils down to an issue of contract law. It will be resolved by the court’s determination as to whether the imposition of the limited joinder by J.P. Morgan, without getting the approval of the other signatories, will trump the application of the Protocol and be applicable only to the financial advisors employed within its Bear Stearns legacy division. While there are other issues being litigated in this case, we will monitor this interesting application of contract law to the Protocol. Stay tuned.