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JPMorgan Accuses Advisor of Breaking Non-Solicitation Vow

J.P. Morgan Securities is suing a former advisor they argue is lulling purchasers to comply with him to his new position at Commonwealth and violating non-solicitation agreements.

In a grievance filed in Florida federal courtroom, J.P. Morgan known as for a short lived restraining order towards Daniel Sutton whereas FINRA arbitration proceedings progressed. However in a responding volley, Sutton’s attorneys argued J.P. Morgan had not “supplied any proof” to assist the accusation that Sutton solicited purchasers utilizing privileged info. In a courtroom listening to on Friday, the choose agreed to increase the TRO for 14 days.

Sutton joined the business in 2010 with stints at AXA Advisors and Merrill Lynch earlier than becoming a member of J.P. Morgan in 2013, in line with his BrokerCheck profile. J.P. Morgan’s grievance alleges that earlier than Sutton resigned on Oct. 5 to affix Commonwealth, he took a trip. Within the night of Oct. 2, he accessed 49 shopper profiles, “rather more than he considered on a typical workday,” in line with the grievance.

Consumer profiles embody info on “names, addresses, prospects’ web price, funding aims, and comparable info that’s confidential and never readily recognized by opponents and that have to be safeguarded,” in line with J.P. Morgan. When he started working for J.P. Morgan, Sutton allegedly signed a non-solicitation settlement prohibiting him from soliciting his J.P. Morgan purchasers for one yr after leaving.

On the time he resigned from J.P. Morgan, Sutton was working as a Non-public Consumer Advisor at a financial institution department workplace in Tampa, Fla., and was not anticipated to chilly name or “construct a shopper base impartial of referrals” from the financial institution, in line with the grievance. As an alternative, the “overwhelming majority” of Sutton’s purchasers had been assigned or referred to him by the financial institution.

However J.P. Morgan believed Sutton had succeeded in attracting some financial institution purchasers over to Commonwealth (the place he’s been FINRA-registered since Oct. 5). 

Not less than 10 J.P. Morgan purchasers knowledgeable the financial institution that they’d acquired calls from Sutton “informing them that he was leaving or had left J.P. Morgan to affix Commonwealth.” In keeping with the grievance, on Oct. 6 Sutton made certainly one of these calls to a former shopper whereas she was at a J.P. Morgan workplace talking with two financial institution staff.

In all, the financial institution believed 9 of Sutton’s J.P. Morgan shopper households (with about $26 million in belongings) had transferred accounts to Commonwealth. Sutton had allegedly considered seven of 9 of those households’ shopper profiles through the night of Oct. 2, in what the financial institution alleged “can’t be a mere coincidence.” 

“(Sutton’s) solicitation of JPMorgan purchasers is ongoing, and with out instant intervention by the Court docket, (Sutton) will proceed to breach his contractual obligations to JPMorgan inflicting vital hurt that can not be undone,” the grievance learn.

However in a court-ordered response, Sutton argued that J.P. Morgan’s solely proof that he violated prior agreements was that he’d checked out shopper profiles earlier than his departure, and that he’d contacted purchasers after he left. However Sutton pressured the agency hadn’t proven any proof he copied info from these profiles or solicited purchasers when calling them.

“To make certain, no such proof exists as a result of (J.P. Morgan), a extremely subtle agency, would have readily uncovered it given the alleged ‘vital measures’ it takes to guard its confidential info, and through the weeks-long investigation it will have carried out to develop precise proof to assist its claims,” Sutton’s memorandum learn.

Sutton additionally claimed that each one the purchasers who’d transferred to Commonwealth would attest that Sutton had not requested them to comply with him to Commonwealth, however that they selected to open Commonwealth accounts with him. 

Moreover, Sutton cited a earlier case wherein J.P. Morgan counsel stated {that a} departing advisor wouldn’t be improperly soliciting purchasers supplied they didn’t use J.P. Morgan info to make the contacts.

Representatives for J.P. Morgan and Sutton didn’t reply to requests for remark previous to publication.

J.P. Morgan beforehand acknowledged that its financial institution department advisors equivalent to Sutton don’t fall underneath the protections of the Protocol for Dealer Recruiting, established in 2004 to supply advisors larger flexibility (and fewer authorized jeopardy) when soliciting purchasers after transferring between wealth administration companies.



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