JPMorgan sues ex private client advisors over solicitation

For the third time in three months, JPMorgan is suing one of its former branch-based advisors after alleging he’s trying to take his book of business to a rival firm.

JPMorgan’s brokerage division, J.P. Morgan Securities, filed a lawsuit in federal court for the Eastern District of Michigan against Brandon M. Love, who returned to UBS in August after coming from there to JPMorgan in 2012. Love, who had worked as a private client advisor in a JPMorgan bank branch in the Detroit suburb of West Bloomfield, Michigan, is now alleged to have taken confidential client information, which he then used to persuade clients to move their accounts.

According to the complaint, nearly 20 households and around $27.7 million in assets have gone with him to UBS. At the time of his departure, Love was working with about 271 households with $184 million in assets in total.

JPMorgan’s suit against Love contains a paragraph that’s almost identical to two other recent suits the firm has filed against departed private client advisors. As in suits filed in June against Matthew McCrea, who left to join Wells Fargo, and Laura Sullivan, who left for Morgan Stanley, JPMorgan alleges Love built his client list largely using referrals from the firm’s banking division.

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“Love sat at his desk at a JPMorgan Chase bank branch and was introduced to hundreds of

existing bank clients (with or without investment accounts) to offer and provide access to investment opportunities through Chase Wealth Management,” according to the suit. “As a Private Client Advisor, Love was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan.”

UBS and JPMorgan declined to comment. Love’s lawyer, Frederick Livingston of the law firm McDonald Baas & Livingston, did not return a request for comment.

The case is the latest to test the legal limits on advisors’ ability to take client information with them when they change firms. In wealth management, those limits are often set by a voluntary industry pact known as the Broker Protocol, which allows advisors to move only client names, addresses, phone numbers, e-mail addresses and account titles.

But those guidelines are unlikely to be of much help in the Love case. UBS left the protocol in 2017, a few months after Morgan Stanley had done the same. JPMorgan has meanwhile stipulated that the protocol does not apply to its private client advisors working out of bank branches.

Sharron Ash, chief legal counsel at Hamburger Law and a specialist in helping with advisor transitions, said the case shows that it’s not enough to assume that the protocol offers protections to just anyone who may be thinking of leaving JPMorgan or any other firm. Advisors also need to make sure the rules that apply to the particular division they work in.

Ash said advisors should talk to lawyers before moving a practice to a rival firm.

“Those discussions should bring up: What will this look like if this goes to litigation?” Ash said. “If you aren’t working with someone who actually litigates these things, you may have a faulty plan.”

Building a book with bank referrals

JPMorgan’s previous suits against McCrea and Sullivan similarly lay stress on the idea that neither advisor was expected to build a book of business without significant help from bank referrals. JPMorgan does acknowledge that Love brought some clients with him when he joined JPMorgan from UBS in 2012.

“However, the vast majority of the clients he serviced at JPMorgan were either pre-existing JPMorgan clients at the time they were assigned to Love, or were developed by him at JPMorgan with JPMorgan’s assistance,” according to the suit. “None of the clients whom Love solicited (as indicated above) transferred to JPMorgan with Love from UBS when he joined in 2012.”

JPMorgan contends that Love wasted little time after his departure on Aug. 8 before he began calling clients on their cellphones and trying to persuade them to transfer their accounts. According to the complaint, clients reported that Love’s communications went beyond simply announcing his change of employer. In some cases, he told clients he “got a promotion at UBS” and offered them the opportunity to work with him at his new firm.

“This apparently was a common ‘pitch’ by Love to clients,” according to the suit. “At least two other clients informed JPMorgan that Love called them on their cell phones and told the clients that he ‘got a promotion at UBS, and said (in sum and substance) that he would love for the clients to bring their accounts to UBS. Both clients told him they were not interested in moving to UBS.”

Mining JPMorgan proprietary data for leads?

JPMorgan’s lawsuit suggests Love’s actions were planned well in advance. The complaint details “highly suspicious computer access” on JPMorgan’s system in the weeks leading up to his resignation. According to the document, on July 28, Love accessed 34 client files and one prospective client file, many in rapid succession. Later that same night, he accessed an additional 12 client files. The day before he resigned, he allegedly accessed files for 17 more clients in just 12 minutes.

JPMorgan asserts that Love would not have been able to reach out to clients so quickly without misappropriating confidential information, such as cellphone numbers, which are not publicly available. The confidential files he allegedly accessed contained addresses, emails, phone numbers, account balances, investment holdings and other data.

The lawsuit emphasizes the considerable amount of time and money JPMorgan has had to put into winning the business of its clients.

“It typically takes many years of dealing with clients for JPMorgan to become their primary investing firm,” according to the suit. “JPMorgan clients typically remain with and continue to be serviced by the firm, regardless of whether the Advisor or other team members resign or leave JPMorgan. But for Defendant’s employment, Defendant would not have had any contact with the vast majority of the clients the firm assigned to him and whom he is now soliciting.”

The lawsuit notes that Love had signed a nonsolicitation agreement prohibiting him from soliciting those clients for another firm for a year after his employment ended. It seeks a temporary restraining order to stop Love from soliciting JPMorgan clients until the dispute can be resolved before an arbitration panel administered by the Financial Industry Regulatory Authority.

It also asks for an order compelling him to return any confidential information he may have taken. The complaint alleges that his conduct constitutes breach of contract, misappropriation of trade secrets, conversion, breach of fiduciary duty and loyalty, and intentional interference with economic advantages.