JPMorgan Sues Bank-Based Broker Who Joined UBS
JPMorgan Chase has asked a court to block a former bank-branch-based broker in Aventura, Florida, from reaching out to former clients about moving their accounts to UBS Wealth Management USA, according to a complaint filed in U.S. District Court in the Southern District of Florida on Tuesday.
The broker, who allegedly managed $81 million in assets for 100 households at JPMorgan Chase, did not return a call for comment. A UBS spokesman declined to comment.
The filing, which seeks a temporary restraining order on solicitation and a preliminary injunction requiring return of proprietary information, is the latest sign that litigation aimed at halting a departing broker’s crucial early days at a new job is a strategy no longer limited to wirehouses. Charles Schwab has filed at least five such suits since July and J.P. Morgan obtained a TRO against a former bank-based broker in New Jersey who joined Merrill Lynch last year.
As in those cases, JP Morgan Chase has asked the court to impose restraints pending resolution of claims simultaneously brought before Financial Industry Regulatory Authority arbitration panels seeking damages and a permanent injunction.
“Defendant’s communications have been more than simply announcing his change of employment,” the complaint against Loperz-Villari said. “Defendant bad-mouthed and disparaged JPMorgan, telling [one] client that, now that Defendant has left JPMorgan, JPMorgan is no longer equipped to handle the client’s accounts.”
Like the arguments made by Schwab and other discount brokers, JPMorgan’s complaint draws a line between traditional brokers who build their own book and those in bank branches or call centers who they say rely on the prestige of the parent bank.
“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,” the complaint said. “Defendant was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan.”
Wirehouses that once regularly filed for TROs when brokers left for rivals backed off the expensive legal strategy more than a decade ago by negotiating the Protocol for Broker Recruiting that allows brokers to take limited customer-contact information when joining another signatory firm. But Morgan Stanley and UBS two years ago dropped out of the Protocol, saying that smaller firms were joining in order to deplete their talent at a time when the big firms had pulled back from recruiting.
Morgan Stanley has since filed TROs in selected cases, while UBS has not been as active. Just last week, Morgan Stanley sued two brokers who joined Wells Fargo Advisors in the same Florida court where JPMorgan filed its suit.
Lopez-Villari first registered as a securities salesperson in 2005 with Ameriprise Financial Services, shifted to IFMG Securities two years later, and did stints at LPL Financial Corp., Essex National Securities and Wells before joining JPMorgan in July 2014, according to BrokerCheck.