JPMorgan is suing a Merrill Lynch team that once oversaw $14 billion at the private bank, accusing the two advisors of "bad-mouthing" the firm to former clients.
In its lawsuit filed last week, JPMorgan accuses Kirk Cunningham and Todd Helfrich of violating a non-solicitation agreement and improperly taking client contact information.
The Chicago-based team left JPMorgan's private bank in February, and started new positions at Merrill Lynch in April following a short garden leave.
Cunningham previously worked as a private banker while Helfrich was an investment specialist. Together, they served about 110 clients with $14 billion in assets at JPMorgan, according to the firm's complaint filed in federal court in Chicago.
JPMorgan accuses the advisors of "bad-mouthing JPMorgan" to clients by making false statements about the firm's ability to serve investors. They've allegedly told clients that JPMorgan "only has junior people left to manage the client accounts," and that the firm "forces its clients to use only its own products," according to the bank's lawsuit.
The bank says it became aware of their solicitation efforts after clients complained about receiving solicitations from the duo via email and phone calls.
One client allegedly complained to JPMorgan about an email he received regarding the team's move.
"My longtime partner, Todd Helfrich, and I have joined Merrill Lynch’s Private Banking and Investment Group from our prior home at JPMorgan. Needless to say, we believe this change will serve our clients well for years to come and we are excited for the new opportunity ahead of us. As before, we will serve ultra-high net worth families in the Midwest and throughout the country from our home base in Chicago," the email said according to JPMorgan's suit.
The same client allegedly received a follow-up email earlier this month from Cunningham, who said he wanted to discuss liquidity management options that he could offer the client at Merrill Lynch, according to JPMorgan's lawsuit.
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The firm filed a motion arguing one of its ex-brokers did not challenge the proceedings until after the panel ruled against her.
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The dispute centered on the firm’s handling of Puerto Rican municipal bonds.
July 24 -
One JPMorgan client thought it was “odd and weird” that the advisor called during the Memorial Day holiday, on behalf of Merrill Lynch.
June 19
JPMorgan says Cunningham and Helfrich have solicited at least six of the bank's clients since they joined Merrill Lynch.
The two advisors have transferred about $160 million in client assets, according to JPMorgan.
The bank asserts that clients were largely provided to the advisors through JPMorgan. About 80% of the clients served by Helfrich and 69% of those served by Cunningham have been clients of JPMorgan for a decade or more, according to the bank.
The bank claims it gave Helfrich and Cunningham "virtually all of the clients they were servicing at the time of their resignations."
Their solicitation efforts breach non-solicitation agreements contained in the contracts and offer letters they signed with the firm, JPMorgan claims.
In addition to seeking a temporary restraining order from a federal judge, JPMorgan is also pursuing separate claims in arbitration, according to the bank's lawsuit.
Spokespersons for JPMorgan and Merrill Lynch declined to comment.
Helfrich and Cunningham could not be reached for comment. It was not clear if they have retained an attorney.
This isn't the first lawsuit in which JPMorgan accused a former advisor of "bad-mouthing" the firm to clients. In April,
