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Regulation and Compliance > Litigation

JPMorgan Gets Restraining Order Against Ex-Advisors

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What You Need to Know

  • JPMorgan alleges five former advisors who left the firm for an LPL network member solicited clients to follow them.
  • An attorney representing the advisors says they deny the allegations.
  • A hearing on JPMorgan’s request for a preliminary injunction is set for Friday.

J.P. Morgan Securities has obtained a temporary restraining order against five former advisors who broke away from the company to join the LPL network member firm Professional Wealth Advisors and are accused of soliciting JPMorgan clients to move with them to their new firm.

The TRO, granted to JPMorgan by U.S. District Judge Matthew F. Kennelly on April 19 in U.S. District Court for the Northern District of Illinois, Eastern Division, temporarily enjoins and restrains Brian Bellot, Scott Cimo, John Goblet Jr., Raymond Kermend and John Searer, “directly or indirectly,” from “soliciting, attempting to solicit, inducing to leave or attempting to induce to leave any JPMorgan client.”

The TRO also temporarily enjoins and restrains them from “hiring, soliciting, inducing or encouraging any current JPMorgan employee to leave JPMorgan or to apply for employment elsewhere,” and also from “using, disclosing or transmitting for any purpose JPMorgan’s documents, materials and/or confidential and proprietary information pertaining to” the firm and its clients and employees.

While employed by JPMorgan, the advisors had executed agreements that contained restrictions on their ability to solicit JPMorgan’s clients and to retain and use JPMorgan’s records after terminating their employment with the firm, according to the TRO.

On the same day that the TRO was granted, JPMorgan filed a complaint in the same court against its former advisors.

The firm alleged that, since their “sudden and coordinated resignations” from JPMorgan, on April 1 by Goblet and the early morning of April 5 by the other four advisors, and the “immediate commencement of their employment” with rival PWA, they started “soliciting JPMorgan clients to move their accounts from JPMorgan to them at PWA.”

The firm also alleged that the advisors called its clients, including from their personal cellphones, “seeking to induce such clients to transfer their accounts from JPMorgan to them at PWA.”

JPMorgan clients allegedly informed the firm that the defendants’ communications had been “more than simply announcing their change of employment, and that they are actively seeking to induce them to do business with them at PWA,” according to the complaint.

“Specifically, numerous clients have informed JPMorgan that Defendants called them after they resigned from JPMorgan and expressly asked them to transfer their accounts to them at PWA,” the firm alleged.

The defendants also “improperly took with them to PWA JPMorgan’s confidential client information, including client contact information, such as cell phone numbers, which, are generally not publicly available, without which they would have been unable to immediately commence calling and soliciting JPMorgan clients as soon as they resigned from JPMorgan,” according to the complaint.

Speaking on behalf of the five advisors on Monday, John S. Monical, a managing partner at the Chicago law firm Lawrence, Kamin, Saunders & Uhlenhop, told ThinkAdvisor his clients “deny that they took confidential information or solicited clients in violation of their agreements.”

The defendants had worked as private client advisors in various Illinois JPMorgan bank branch offices: Bellot and Kermend in Wheaton, Cimo in Downers Grove, Goblet in St. Charles, and Searer in Carol Stream. The five are registered as advisors and brokers, according to their reports on the Financial Industry Regulatory Authority’s BrokerCheck website.

LPL did not immediately respond to a request for comment. A hearing on JPMorgan’s request for a preliminary injunction is set for Friday.