Charles Schwab has lost a fight with a former financial consultant it claimed breached a confidentiality and non-solicitation agreement she signed with the firm.
A FINRA arbitration panel ordered Schwab to pay Carolyn Kitzel $165,000 in legal fees and costs she incurred to defend herself against allegations that she poached Schwab clients and stole proprietary information after moving to J.P. Morgan Securities.
"She didn't solicit any of her former customers at Schwab and more importantly not a single one of her customers from Schwab transferred their accounts over to J.P. Morgan," said Kitzel's lawyer, Christopher Griesmeyer of Chicago law firm Greiman, Rome & Griesmeyer.
J.P. Morgan sent out mass mailings announcing Kitzel's arrival to "J.P. Morgan's own customers, using only J.P. Morgan's own information from J.P. Morgan's own database," Griesmeyer claimed.
Kitzel joined J.P. Morgan's Chicago office in June 2014, according to her BrokerCheck record. She had been with Charles Schwab in Chicago since January 2007.
Griesmeyer speculates that Schwab initiated the arbitration to spite J.P. Morgan and "teach the firm a lesson" with respect to other brokers who may leave Schwab for the rival brokerage. He suspects that Schwab grouped Kitzel in with other cases that Schwab has against J.P. Morgan.
"We argued during closing arguments that if Schwab wants to engage in a nationwide war against J.P. Morgan, it can do that but it needs to pick and choose its battles," Griesmeyer said.
Schwab was also ordered to pay J.P. Morgan Securities the sum of $122,000 for the attorneys' fees and costs it incurred.
Greg Gable, a spokesman for Schwab, declined to comment. J.P. Morgan's attorney, Jack Carriglio of Chicago law firm Cozen O'Connor, did not return email and voice messages.
