A federal judge granted a temporary restraining order barring a former JPMorgan advisor from soliciting clients after he jumped ship to Raymond James.
It’s the latest legal victory for a firm seeking to handicap former employees for allegedly breaching non-solicitation agreements.
Erik Weiss, who worked in JPMorgan's banking channel in Indianapolis, left the firm in September and immediately began wooing his former clients in violation of a non-solicitation agreement he had signed,
Judge Tanya Walton Pratt found the evidence that JPMorgan presented credible, and issued the restraining order to bar Weiss from contacting his clients and accessing JPMorgan's documents and proprietary information until FINRA addresses the dispute in an arbitration proceeding.
The judge cited JPMorgan's contention that it learned that Weiss had been "engaging in aggressive solicitation of JPMorgan's clients and disparaging JPMorgan in the process."
"These clients have confirmed that Weiss has contacted them not simply to announce his change in employment but to actively solicit their business on behalf of Raymond James," Pratt wrote.
Weiss did not immediately respond to a request for comment on the ruling. Spokespeople for JPMorgan and Raymond James declined to comment.
Weiss' attorneys had argued against JPMorgan's version of his transition, contending that he had been obligated by a fiduciary duty to notify former clients about his move, and that he relied on "casual memory" and publicly available information to contact them.
They argued that he had not been soliciting former clients, and, moreover, that JPMorgan's non-solicitation agreement was overly broad and restrictive.
Weiss worked with roughly 600 clients or households, managing roughly $197 in assets, according to JPMorgan. When the firm filed its initial complaint in October, JPMorgan claimed that Weiss had already transferred $27 million in assets of about 40 of his former clients to his new practice at Raymond James.
JPMorgan contends that the "substantial majority" of the clients that Weiss worked with were either assigned or referred to him by the firm, and that the non-solicitation agreement barred him from recruiting them for one year.
In its initial complaint, JPMorgan alleged that Weiss had breached his contract and his fiduciary duty, as well as misappropriated trade secrets and engaged in unfair competition.
JPMorgan cited multiple unnamed clients who reportedly told the firm that Weiss had contacted them about moving their accounts. One client allegedly "felt pressured" by Weiss to follow him to Raymond James, and another informed JPMorgan that Weiss was making disparaging comments about the bank’s product menu.
Weiss' attorneys had argued that such allegations amounted to "triple hearsay" and did not warrant the "appreciable harm" that Weiss would endure if he was hit with an injunction.
The judge noted that, unlike in a trial, hearsay can play an operative role in a district court's determination of whether to grant a preliminary injunction.
Weiss had also contended that JPMorgan, as a signatory of the Broker Protocol, authorized departing employees to take with them limited customer information such as names and phone numbers. The judge rejected that argument, noting that JPMorgan's participation in the Protocol did not extend to its banking business where Weiss worked.
"JPMorgan joined the protocol in a limited capacity, expressly limiting its applicability to certain divisions or lines of business, none of which apply to the circumstances of this case," she wrote.
By FINRA's rules, it must convene an arbitration hearing within 15 days of a court issuing a temporary injunction against a registrant.
