J.P. Morgan takes three former advisers who joined competitor to court

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J.P. Morgan Securities LLC says three former employees at its Carmel office who left to work for Raymond James & Associates improperly solicited clients in an effort to get them to do business with their new employer.

The legal complaint pits J.P. Morgan against Nathan D. Shields and Mark V. Obrzut, former private client advisers; and Jackson M. Stewart, a former private client banker. All three men left J.P. Morgan in August to join Raymond James.

As of September, when J.P. Morgan filed its lawsuit, the firm said at least 20 clients with a total of nearly $30 million in assets had moved—or indicated their intent to move—their accounts from J.P. Morgan to Raymond James.

In federal court filings, all three men dispute J.P. Morgan’s claims.

Earlier this month, U.S. District Court Judge Sarah Evans Barker issued a preliminary injunction against Shields, Obrzut and Stewart that prohibits them from soliciting any J.P. Morgan clients whom the three men worked with or knew of while at J.P. Morgan. The injunction also prohibits the three from using, disclosing or transmitting any of J.P. Morgan’s confidential information.

In seeking the preliminary injunction, J.P. Morgan said in court filings that Shields, Obrzut and Stewart “engaged in improper solicitation of clients, both before they resigned from J.P. Morgan and after they joined their new firm, Raymond James.”

The three also “improperly took with them to Raymond James J.P. Morgan’s confidential client information,” including contact information, J.P. Morgan alleges.

J.P. Morgan says that when the three were employed at the firm, they signed non-solicitation agreements that prohibited them from soliciting J.P. Morgan clients for a year after leaving the firm, and that required them to maintain the confidentiality of the firm’s proprietary business and client information.

In their legal response, Shields, Obrzut and Stewart deny J.P. Morgan’s allegations, calling them “unfounded” and “utterly false.” 

“To the contrary, after resigning from J.P. Morgan, defendants used only their memories and publicly available sources of information to contact their clients to simply let them know that they had resigned from J.P. Morgan,” the three said in court filings. “In fact, clients that followed defendants to Raymond James state, in no uncertain terms, that defendants did not solicit their business.”

Shields, Obrzut and Stewart also say that clients have the right to decide who they want to manage their investments.

The dispute itself is being handled through the Financial Industry Regulatory Authority, or FINRA, arbitration process.

In FINRA arbitration, a panel of independent arbitrators hears disputes and decides what, if any, relief the claimant is entitled to. 

FINRA arbitration cases are kept confidential, but arbitration awards are made publicly available after the fact. 

On average, FINRA says, arbitration cases take about 14 months from initial filing to resolution.

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