JPMorgan Seeks TRO Against In-Bank Broker Now at Merrill Lynch
J.P. Morgan Securities asked a Louisiana court to issue a temporary restraining order and injunction prohibiting a broker who jumped to Merrill Lynch with a client associate two weeks ago from calling former clients and sending them account-transfer and other forms.
Berry, a former Edward Jones broker who joined Chase ten years ago, oversaw a book of 337 clients with about $121 million in assets, and has violated his employment contract and customer privacy protection rules by “more than simply announcing his change of employment” to them before his one-year solicitation agreements expired, it said.
The litigation, which seeks an order prohibiting client solicitation pending the outcome of a parallel Finra arbitration proceeding that J.P. Morgan concurrently filed, is the latest in which large firms have pursued non-traditional producers who they claim passively received client referrals and who have increasingly been courted by Merrill, UBS Wealth Management USA and other firms.
“Defendant sat at his desk at the 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,” the complaint says. “As a Private Client Advisor, Defendant was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan.”
Reached at his Merrill office in Baton Rouge, Berry referred requests for comment to Merrill officials. A spokesman at Merrill declined to comment.
The filing asserts that Berry aggressively courted former clients through calls to their cell phones, pitching them on “new products at Merrill Lynch,” telling one she had not choice about needing to follow him, and sending pre-paid, pre-addressed account transfer and account opening packages that included pre-printed personal information and account type data.
At least one client has indicated an intent to move accounts, J.P. Morgan’s filing said.
The lawsuit, which also seeks return of allegedly confidential information the broker possesses, continues a pattern that JPMorgan, Charles Schwab, Fidelity Investments and other firms have brought in the past year against firms who recruited bank- and call-center brokers to their traditional brokerage branches.
An Indiana court last year granted a temporary restraining order against a former J.P. Morgan broker, but an arbitration panel refused to convert it to a permanent order. The bank also prevailed in obtaining court orders restraining solicitation by two Florida brokers who joined UBS last year, including one in Fort Lauderdale and another in Aventura. Those cases are pending in arbitration, according to court filings.
The latest case also highlights the shift of Bank of America-owned Merrill Lynch from recruiting experienced brokers from competitors to seeking those with minimal experience at regional firms, in small “community markets” or, occasionally, who have traditional private banking backgrounds.
Unlike UBS and Morgan Stanley, Merrill Lynch remains in the Protocol for Broker Recruiting that allows brokers to take limited customer-contact information when joining other signatory firms. J.P. Morgan subscribes to the protocol for its traditional brokers, many of whom it inherited when it acquired Bear Stearns Securities in May 2008 during the financial crisis, but excludes bank-based brokers from the pact’s protection.