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JPMorgan Accuses Advisor of Breaking Non-Solicitation Vow


Oct 29, 2023


J.P. Morgan Securities is suing a former advisor they argue is lulling shoppers to observe him to his new position at Commonwealth and violating non-solicitation agreements.

In a criticism filed in Florida federal court docket, J.P. Morgan referred to as for a short lived restraining order towards Daniel Sutton whereas FINRA arbitration proceedings progressed. However in a responding volley, Sutton’s attorneys argued J.P. Morgan had not “offered any proof” to assist the accusation that Sutton solicited shoppers utilizing privileged info. In a court docket listening to on Friday, the choose agreed to increase the TRO for 14 days.

Sutton joined the business in 2010 with stints at AXA Advisors and Merrill Lynch earlier than becoming a member of J.P. Morgan in 2013, in line with his BrokerCheck profile. J.P. Morgan’s criticism alleges that earlier than Sutton resigned on Oct. 5 to affix Commonwealth, he took a trip. Within the night of Oct. 2, he accessed 49 shopper profiles, “way more than he considered on a typical workday,” in line with the criticism.

Shopper profiles embrace info on “names, addresses, prospects’ internet value, funding targets, and related info that’s confidential and never readily recognized by opponents and that have to be safeguarded,” in line with J.P. Morgan. When he started working for J.P. Morgan, Sutton allegedly signed a non-solicitation settlement prohibiting him from soliciting his J.P. Morgan shoppers for one 12 months after leaving.

On the time he resigned from J.P. Morgan, Sutton was working as a Non-public Shopper Advisor at a financial institution department workplace in Tampa, Fla., and was not anticipated to chilly name or “construct a shopper base unbiased of referrals” from the financial institution, in line with the criticism. As a substitute, the “overwhelming majority” of Sutton’s shoppers have been assigned or referred to him by the financial institution.

However J.P. Morgan believed Sutton had succeeded in attracting some financial institution shoppers over to Commonwealth (the place he’s been FINRA-registered since Oct. 5). 

At the least 10 J.P. Morgan shoppers knowledgeable the financial institution that they’d obtained calls from Sutton “informing them that he was leaving or had left J.P. Morgan to affix Commonwealth.” In accordance with the criticism, on Oct. 6 Sutton made one in every of these calls to a former shopper whereas she was at a J.P. Morgan workplace talking with two financial institution workers.

In all, the financial institution believed 9 of Sutton’s J.P. Morgan shopper households (with about $26 million in property) had transferred accounts to Commonwealth. Sutton had allegedly considered seven of 9 of those households’ shopper profiles through the night of Oct. 2, in what the financial institution alleged “can’t be a mere coincidence.” 

“(Sutton’s) solicitation of JPMorgan shoppers is ongoing, and with out rapid intervention by the Court docket, (Sutton) will proceed to breach his contractual obligations to JPMorgan inflicting important hurt that can’t be undone,” the criticism learn.

However in a court-ordered response, Sutton argued that J.P. Morgan’s solely proof that he violated prior agreements was that he’d checked out shopper profiles earlier than his departure, and that he’d contacted shoppers after he left. However Sutton pressured the agency hadn’t proven any proof he copied info from these profiles or solicited shoppers when calling them.

“To make certain, no such proof exists as a result of (J.P. Morgan), a extremely subtle agency, would have readily uncovered it given the alleged ‘important measures’ it takes to guard its confidential info, and through the weeks-long investigation it might have carried out to develop precise proof to assist its claims,” Sutton’s memorandum learn.

Sutton additionally claimed that each one the shoppers who’d transferred to Commonwealth would attest that Sutton had not requested them to observe him to Commonwealth, however that they selected to open Commonwealth accounts with him. 

Moreover, Sutton cited a earlier case wherein J.P. Morgan counsel stated {that a} departing advisor wouldn’t be improperly soliciting shoppers offered they didn’t use J.P. Morgan info to make the contacts.

Representatives for J.P. Morgan and Sutton didn’t reply to requests for remark previous to publication.

J.P. Morgan beforehand acknowledged that its financial institution department advisors equivalent to Sutton don’t fall below the protections of the Protocol for Dealer Recruiting, established in 2004 to supply advisors larger flexibility (and fewer authorized jeopardy) when soliciting shoppers after shifting between wealth administration companies.


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