Norris McLaughlin & Marcus, P.A.

Blogs > Transitions in Employment

IN THE NEWS: J.P. Morgan Pursues Arbitration Case Against Advisors

Posted on November 11th, 2016 | Author: David T. Harmon

I was recently interviewed by Fundfire, a financial services industry on-line publication, regarding J.P. Morgan obtaining a temporary restraining order as it pursues an arbitration case against seven advisors who left to launch an independent shop with LPL Financial. This is yet another case involving the protections of the industry’s agreement called the Protocol for Broker Recruiting.

On October 27, seven private bank advisors left and registered with LPL, launching Gulf Point Advisors, which focuses on working with family offices. J.P. Morgan claims the advisors violated their agreements and obligations by their conduct before and after resigning claiming breach of contract, misappropriation of trade secrets, breach of fiduciary duty, breach of loyalty, conversion and unfair competition, and other claims.

On Monday, November 7th, a U.S. district judge granted J.P. Morgan’s request for a temporary restraining order against the advisors. The order temporarily restrains them from soliciting clients they had serviced while they were employed at J.P. Morgan, poaching former colleagues to work for them, and using J.P. Morgan’s documents or proprietary information about employees or clients.

J.P. Morgan is no stranger to pursuing claims against advisors who have left its private bank and other division not covered under the Protocol for Broker Recruiting. As I stated in the Fundfire interview, advisors leaving a firm, or a division of a firm, that isn’t a signatory to the Protocol, can’t avail themselves of its protections. If you don’t have Protocol protection, you have to take it up a couple notches in terms of how careful you’re going to be. In order to avoid legal trouble when leaving a non-protocol signatory firm, advisors must adhere to their prior agreements, and work with the company they are joining, and legal counsel, to determine what’s permissible and what’s impermissible.