Ameriprise Brokers Fight TRO Bids from J.P. Morgan, Wells
Two new arrivals to Ameriprise Financial’s employee channel are battling legal moves from J.P. Morgan Securities and Wells Fargo Advisors to prevent the brokers from calling former clients.
J.P. Morgan on Wednesday asked a federal court in Lansing, Mich., for a temporary restraining order and preliminary injunction against Ryan H. Riley, who worked for most of his 12-year brokerage career at bank branches. It also said it was contemporaneously filing a claim for damages in a Finra arbitration forum, as is typical of the TRO process.
Riley, who was overseeing about $146 million in assets, made personal cell phone calls to numerous clients “aggressively” soliciting his former clients, it said.
Ameriprise will soon respond to the J.P. Morgan lawsuit and “articulate why we believe this case is without merit,” a spokeswoman said.
In a state court in Georgia, meanwhile, Wells Fargo Advisors has embroiled Ameriprise in a lawsuit against Glen Wilk, who had been with Wells for almost half of his 31-year career before leaving in late May. He, too, worked from a bank branch, and had convinced customers to transfer $51 million in 900 accounts to Ameriprise within a month of his move, according to Wells’ motion in late June for a temporary restraining order.
Wilk violated numerous contracts because he took confidential client information that went beyond what was allowed under the Protocol for Broker Recruiting, according to the complaint.
Requests for restraining orders were once a common strategy for large full-service brokerage firms seeking to keep clients of large brokers in-house in the crucial few days after a large producer resigned.
Many have pulled back from the aggressive tactic since the Protocol was designed 15 years ago to lower legal costs and comply with privacy protection laws, but discount brokers and banks selling advisory services from branches have adopted it.
In a sign of their zeal to protect the solicitation even of customers who buy their advice in bank branches rather than from advisors in more hushed private client offices, the banks and discount brokers often assert that clients belong to them because breakaway brokers built most of their business on referrals from other employees or on the back of their firms’ reputations.
Riley, who first registered as a broker in 2007 with A.G. Edwards & Sons and who joined Chase Investment Services in 2011, declined to comment on J.P. Morgan’s lawsuit when reached by phone at his office.
A J.P. Morgan spokeswoman declined to comment on its court filing.
Wilk, the former Wells broker who worked from a bank branch in Lawrenceville, Georgia, said in a court filing that he had moved to Ameriprise out of concern for his former clients.
“For most of my career at Wells Fargo, I was proud to work there,” he wrote. “However, beginning with the exposure of the fake accounts scandal in 2017, it became increasingly clear that Wells Fargo had begun to prioritize profit over the best interests of the clients.”
He also denied Wells’ charges that he taken confidential information, asserting that the bank could not find client files because he had followed its preference to enroll them electronically in its Envision financial planning program.
“Mr. Wilk ran a paperless business and therefore the client files were not missing, they simply did not exist,” his opposition memorandum said.
Wells Fargo Advisors, which also has filed a Finra arbitration complaint, accused Wilk and Ameriprise of carrying out a “fraudulent scheme” to open accounts for some of his former customers without their approval, based on forms containing personal information he had sent to some of them.
“These accounts were unauthorized and should never have been opened,” the complaint said. “Wilk and Ameriprise then sent WFA customers a letter thanking them for opening accounts (some or all of which the customers did not even know existed) and further soliciting the customers to move to Ameriprise.”
The Wilk case has been assigned to a new judge in the Superior Court of Gwinnett County, and a hearing on issuing a preliminary injunction will not be held until August 20, almost three months after the broker left Wells, according to a person familiar with the proceedings. The hearing will not address Wells’ initial request for an emergency TRO, he said.
Spokespeople at Ameriprise declined to comment on the ongoing Wells accusations against Wilk.
Another recent Ameriprise recruit, Samuel “Ed” Clyburn, Jr., was sued last week by Edward Jones for alleged solicitation violations relating to his departure in late June to affiliate with Ameriprise’s independent channel.
Brady Hermann, a securities lawyer at Boston-based Maurice Wutscher, said he is not surprised by the explosion of solicitation cases.
“It really comes down to firms strongly believing that the client accounts are their assets, and if an advisor wants to move firms, the prior firm is going to protect what they believe is theirs,” he said. “As these recruiting wars continue, you will continue to see TRO filings like these, especially in states that are less-friendly to employees.”
900 accounts with 50 million? Kill me now.