J.P. Morgan Private Bank Secures Non-Solicit Agreement From UBS Duo in Texas
A former J.P. Morgan Private Bank duo in Fort Worth, Texas, agreed to stop soliciting their old clients to join them at their new firm, UBS Wealth Management USA, according to court filings.
Under a joint agreement finalized by an August 5 state court order, East and Farrell, who had spent their entire careers at J.P. Morgan, are prohibited from directly or indirectly soliciting clients and using or disclosing any confidential information as defined by the bank’s code of conduct.
The order will remain in effect until a Finra arbitration panel rules on J.P. Morgan’s request for permanent injunctive relief and damages.
The case reflects J.P. Morgan’s willingness to defend its flanks as a raft of private bankers have departed in the past year and UBS has hired over half-a-dozen teams. J.P. Morgan has also been pursuing a years-long arbitration and court case against a Chicago registered investment advisory firm, Cresset Asset Management, and a senior executive over its “raid” on bankers.
Spokespeople for J.P. Morgan and UBS declined to comment on the matter.
The brokers’ attorney, Aaron Tobin of Dallas-based law firm Condon Tobin, did not respond to a request for comment.
The order does not prohibit the brokers from responding to in-bound communications from former customers initiating contact with them, or doing business with former customers who have either transferred or are transferring their accounts to UBS.
The brokers’ agreement also does not constitute an admission of wrongdoing, and the court did not make findings or any determination as to liability or whether East and Farrell had violated their employment agreements, according to the order.
The two were prohibited by their employment agreements from soliciting J.P. Morgan customers for 12 months following termination of their employment, according to the bank’s petition. Private Banks are often defensive in protecting their customers, who are often more heavily tied to the bank than clients of traditional brokers.
J.P. Morgan alleged that East and Farrell made “repeated unwanted” calls to clients, in some instances, offering to charge them “no fees for a year” if they transfer and suggesting their accounts “are not getting the proper attention at JPMorgan because JPMorgan deems the clients’ accounts as too small.”
The bank also said it believed that the two had taken with them client information, including cell phone numbers “without which they would have been unable to immediately commence calling and soliciting” their former customers, according to the petition.
East and Farrell, at the time of the petition’s filing, had successfully lured 13 J.P. Morgan clients with more than $185 million in total client assets, J.P. Morgan said. The bank has not identified a specific damage claim but said they are “likely to be in excess of $1 million.”
East, an investment specialist, and Farrell, a banker, had given notice of their resignations on March 5, according to J.P. Morgan’s petition. At the time of their move to UBS, the two had managed $1.8 billion in client assets and generated about $10.2 million in annual revenue, according to sources familiar with the practice.