Judge knocks down JPMorgan’s ‘almost laughable’ argument in win for Ameriprise advisor
JPMorgan’s attorney attempted to lay out his case: One of the firm’s former advisors had violated his non-solicitation agreements, moving millions of dollars in client assets to his new employer Ameriprise. If something wasn’t done, irreparable harm would be done.
But the judge wasn’t buying it, going so far as to call one of the bank’s legal arguments “almost laughable.”
The case, which featured the advisor’s handwritten notes and affidavits from clients, is one in a steady string of lawsuits pitting brokerages against brokers over client contacts.
Last week in a federal court, Judge Janet Neff dissolved a temporary restraining order against advisor Ryan Riley, who had become the target of a lawsuit after he left JPMorgan for Ameriprise in July.
“I don't see how you could come to the conclusion that a single financial advisor in a small branch bank in Okemos, Michigan, which is a suburb of Lansing, Michigan, could inflict irreparable harm on a financial giant like J.P. Morgan,” the judge said according to a transcript of an Aug. 19 court hearing.
For Riley, it was a key legal victory against a temporary restraining order his attorneys called “incredibly damaging” to his reputation.
JPMorgan had accused Riley of “aggressively” violating non-solicitation agreements in a lawsuit filed in federal court in Michigan. Approximately $25 million of the $146 million in client assets Riley oversaw at JPMorgan have transferred to his new employer Ameriprise since July, according to the bank’s lawsuit.
Judge Neff granted the bank’s request for a TRO two days after it filed its lawsuit.
Riley’s attorney argued they had not had an opportunity to present a defense against JPMorgan’s “frivolous” lawsuit, and filed a motion to reconsider the order.
The bank offered “no credible, admissible evidence that [Riley] actually engaged in misconduct,” Riley’s attorney’s argued.
The TRO has been “incredibly damaging” to Riley's reputation and is "unwarranted," the attorneys said in subsequent filings, noting the judge’s order was part of the public record. News articles,including one by Financial Planning, “are among the first results retrieved when entering Mr. Riley’s name into Google – surpassing even Mr. Riley’s own LinkedIn page.”
Riley denied he had solicited any clients or taken confidential information with him after he quit JPMorgan, according to court filings.
“I merely contacted clients to announce my change of firm and new
contact information, and did not solicit any clients,” the advisor wrote in a court filing.
In addition, his attorneys submitted affidavits from clients attesting that they had not been solicited to move their assets. The clients’ names were redacted.
The court filings from the two sides also included Riley’s hand-written notes, made after he left JPMorgan, as well as a text message exchange with an unnamed client who asked Riley to send him his new Ameriprise contact information. Riley replied that he would send an email and told the client to “follow up anytime.”
At the court hearing, Judge Neff pressed JPMorgan’s attorney on whether clients had indeed told the bank they had been solicited. Not getting a satisfactory answer, the judge told the attorney “you are dancing all around my question,” according to a transcript.
Later, she called JPMorgan’s argument it would suffer irreparable harm “almost laughable.”
At another point in the hearing, JPMorgan’s attorney said it would be “extremely difficult for JPMorgan to prove their monetary damages.” That is why the bank would suffer irreparable harm, he said. The judge threw cold water on the argument.
“That's really ripe. That is really good. I got to give it to you there. That's a great argument. Go ahead. Very inventive. Very creative,” she said, according to a transcript.
Judge Neff found JPMorgan’s other legal arguments lacking. She said Riley “acquitted himself quite well in his deposition in denying any wrongs,” and ruled against the bank’s request for a preliminary injunction. She also took note of clients’ stake in the outcome.
“I think that the public interest would also be negatively affected if third-parties, the customers of these financial institutions, don't have the right to choose who will represent them,” she said.
Attorneys for Riley and JPMorgan declined to comment on the case.
Riley had been with JPMorgan’s Chase Wealth Management business for about a decade, according to FINRA BrokerCheck records. The division is not a member of the Broker Protocol, an industry agreement that permits advisors to take basic client information with them when switching firms. Ameriprise, an aggressive recruiter, is a member of the protocol.
Other advisors leaving non-protocol firms have also faced legal challenges over client contacts.Edward Jones sued one of its former brokersfor allegedly soliciting clients to join him at his new employer, Ameriprise. In March, JPMorgan won a temporary restraining order against an advisor who joined Merrill Lynch and was allegedly soliciting clients.