New York Securities Lawyer Blog
In May 29, 2015, J.P. Morgan Chase Bank, N.A. and J.P. Morgan Securities LLC (collectively “JPMorgan”) moved to renew a motion, before the United States District Court for the District of New Jersey, seeking a preliminary injunction (the “Motion”) against six (6) former registered representatives (the “Brokers”), who left JPMorgan to join Morgan Stanley. According to court documents, the Brokers managed $2 Billion of client assets derived from four-hundred (400) families’ accounts that produce approximately $15 million in revenue per year. The purpose of the preliminary injunction was the preserve the status quo ante by enjoining certain client solicitation activities by the Brokers, while JPMorgan and the Brokers resolved issues related to the Brokers’ transition to Morgan Stanley through arbitration.
In its Motion, JPMorgan alleged, inter alia, that since transitioning from JPMorgan to Morgan Stanley, the Brokers illegally solicited JPMorgan clients and converted JPMorgan’s confidential and proprietary client information. JPMorgan’s Motion argued that a preliminary injunction preventing the Brokers from continuing to solicit JPMorgan clients is necessary because the resulting financial harm and loss of customers’ confidence is unascertainable and as such, no other adequate remedy at law exists.
On June 8, 2015, the Brokers filed a forty-page Memorandum of Law in Opposition to Motion for Injunctive Relief (“Opposition”). Generally, the Brokers’ Opposition argued that the District Court should deny JPMorgan’s Motion because JPMorgan is a signatory to the Protocol for Broker Recruiting (the “Protocol”) and all of the Brokers’ activities were permitted under the Protocol. Briefly, the Protocol is an agreement between many of the major securities firms that is designed to give clients the opportunity to choose their financial advisory on the merits of their relationships, rather than though the court system. Under the Protocol, a registered representative who transitions from one Protocol signatory firm to another is permitted to solicit his or her clients once they join the new firm and is permitted to retain certain limited client information.