Not your book of business, JPMorgan says to ex-advisor in latest lawsuit

Advisors who depart for other firms have no right to client data in books of business built using bank referrals, JPMorgan argues in a new lawsuit seeking a restraining order against a former advisor who jumped to Morgan Stanley.

At the heart of JPMorgan's latest action against one of its former employees is Henry Robert Gleckler IV, an ex-private client advisor sued by J.P. Morgan Securities in New York Supreme Court last week shortly after he resigned to join Morgan Stanley. As in other recent legal actions against former advisors, JPMorgan is accusing Gleckler of violating contract provisions that require him to keep the firm's data private and bar him from soliciting business from his former clients for a year after leaving.

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Gleckler, based in Garden City, New York, had been working with roughly 383 client households with $474 million in assets under management when he left, according to the firm's complaint. JPMorgan alleges that he called at least one of those clients the day he resigned and was in touch with many more in the following days and weeks.

"It appears Gleckler's solicitation efforts have proved successful, as approximately 25 JPMorgan households/clients, with investment assets totaling approximately $56 million, already have transferred or are in the process of transferring their accounts from JPMorgan to Gleckler at Morgan Stanley," according to the complaint.

Neither JPMorgan nor Morgan Stanley, which was not named as a defendant in the case, would comment for this article. In an affidavit filed on Monday, Gleckler said he never solicited ex-clients but rather simply announced that he had changed firms.

In JPMorgan's eyes, even that was going too far.

'Amongst the toughest in the banking channel for advisors'

Many times when advisors move from one wealth management firm to another, they're able to claim certain protections under an industry-spanning pact known as the Broker Protocol. The voluntary pact provides a legal safehouse to advisors who limit themselves to transferring only client names, addresses, phone numbers, e-mail addresses and account titles to their new firms.

Although JPMorgan belongs to the Broker Protocol, it has long maintained the pact's protections do not apply to its private client advisors. The protocol, JPMorgan argues, is primarily meant for advisors who build their own books of business; private client advisors, by contrast, get the bulk of their clients through referrals from the firm's bank.

Phil Waxelbaum, the founder of the recruiting firm Masada Consulting, said JPMorgan takes its prohibitions a step further with its private client advisors. Protected by the protocol or not, advisors leaving most firms can usually tell their former clients where they will be going next; JPMorgan's contracts seek to prevent ex-private client advisors from doing even that.

"By adding that one no-contact provision, JPMorgan's contract is amongst the toughest in the banking channel for advisors," Waxelbaum said.

Gleckler's lawyer, Jonathan Thau, said his client "followed best practices in moving to Morgan Stanley."

He noted that JPMorgan hasn't submitted in court a single email, text message or phone call transcription showing Gleckler trying to solicit one of his former clients.

"We don't believe that JPMorgan has presented any credible evidence that he did anything wrong," Thau said.

JPMorgan's other recent cases against ex-private client advisors

Gleckler is just the latest former private client advisor to stoke JPMorgan's ire after leaving for a rival firm. The firm's other recent legal actions include suits against:

• Matthew Madera, a private client advisor who left JPMorgan in October to join Genesis Wealth in the Chicago suburb of Bolingbrook, Illinois;
• Brandon M. Love, who left in August to join UBS in the Detroit suburb of West Bloomfield, Michigan;
• Laura Sullivan, who left in May to join Morgan Stanley in Farmington Hills, Michigan; and
• Matthew McCrea, who left in April to join Wells Fargo in Las Vegas.

In all of its suits against former private client advisors, JPMorgan seeks a temporary restraining order forbidding the former client advisors to reach out to ex-clients until the disputes can be resolved by a Financial Industry Regulatory Authority arbitration panel. The legal actions also draw a sharp distinction between brokers who build their businesses largely on their own and private client advisors who receive a large number of client referrals through JPMorgan's bank.

Gleckler, for instance, "sat at his desk and was introduced to hundreds of existing bank clients (with or without investment accounts) to offer and provide access to investment opportunities through Chase Wealth Management," according to JPMorgan's suit. "As a Private Client Advisor (or a Financial Advisor), Gleckler was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan."

Replying to the suit filed Monday, Gleckler's lawyers note that that passage is almost identical to language appearing in the firm's other suits against former private client advisors.

"JPMorgan's Petition here and its supporting memorandum of law and affidavit consist almost entirely of boilerplate statements and allegations," according to the reply. "In its efforts to obtain temporary restraining orders against the financial advisors who resign from it to join a competitor, JPMorgan often makes the very same allegations … often just removing one financial advisor's name from a given pleading and plugging in another."

The no-prospecting privileges of a bank advisor

Thau said JPMorgan seems to have a double standard with the Broker Protocol. It's happy to embrace the pact when it recruits from a rival. But when one of its own advisors is pulled away, it argues the protocol's protections don't apply.

Waxelbaum, though, said there is some sense in distinguishing between regular advisors and those who draw most of their business from bank referrals.

"Bank advisors never want to hear this, and they all cry and whine about it, but the truth of the matter is that for most of them, 50% or more of their book was gifted to them," he said. "And if you take the luxury of sitting in a bank branch and not having to prospect in order to build this business, and it's all referrals based on the bank, there's some fairness in the idea that the Lord giveth, the Lord taketh."

In Gleckler's case, there may be some ambiguity regarding how much of his client book came from bank referrals. Gleckler started in the securities industry in 2007 at Chase Investment Services, then a subsidiary of JPMorgan, and switched over to the brokerage side of JPMorgan's business in 2014, becoming a private client advisor the following year.

He was named a select private client advisor in 2022, making him a member of what JPMorgan's complaint describes as "a prestigious and select group rewarding JPMorgan's most senior, high producing Private Client Advisors."

The complaint notes that although select private client advisors are expected to keep working with clients brought to them through the bank, they "no longer receive new client referrals from JPMorgan Chase."

Alleged misuses of proprietary data

JPMorgan's suit accuses Gleckler of breach of contract, misappropriation of trade secrets and confidential information, breach of fiduciary duty, breach of the duty of loyalty and other violations. It alleges, for instance, that Gleckler relied heavily on the firm's proprietary data when reaching out to former clients. That included phone numbers and account information held on JPMorgan computers, according to the suit.

Without the information, according to JPMorgan, Gleckler couldn't have been in touch with his former clients so soon after leaving, nor would he have had such success moving accounts over to Morgan Stanley, according to the suit.

"JPMorgan has invested substantial corporate resources to develop and maintain its client information," the suit states. "The vast majority of the JPMorgan clients that Respondent serviced were developed by JPMorgan at great expense and over a number of years."

JPMorgan noted that Gleckler began accessing account information with unusual frequency in the weeks leading up to his resignation. In October, for instance, he looked at client profiles stored at the firm more than 1,200 times, often "outside of normal business hours and in rapid succession." That was by far the greatest number he had accessed in any period going back to at least July 2021, according to JPMorgan.

Gleckler, in his affidavit, said he reached out to his old clients not by drawing on phone numbers and other proprietary data held at JPMorgan but instead by looking them up using online search services like Whitepages Premium, TruePeopleSearch.com and FastPeopleSearch.com.

"These are publicly available websites," Gleckler said. "And, this is the contact information that I used in order to reach out to my clients so that I could inform them that I moved to Morgan Stanley and to provide them with my new contact information at Morgan Stanley."