A federal judge rejected JPMorgan Chase’s request for a temporary restraining order against one of its former financial advisors whom the bank accused of violating a nonsolicitation agreement since switching employers.
The bank’s loss comes less than two months after JPMorgan suffered a similar setback in another legal battle with a financial advisor over alleged client solicitations.
The company has sued a number of advisors that have left to join rivals for allegedly violating nonsolicitation agreements. But it has had mixed success recently in convincing judges to issue temporary injunctions that restrict advisors’ ability to communicate with clients at the firm they left.
JP Morgan Chase
Michael Nagle/Getty Images
In the latest case, J.P. Morgan Securities, the bank’s brokerage arm, accused advisor Taulent Cela of violating a one-year nonsolicitation agreement after leaving the company to work for rival Wells Fargo on Feb. 4. Cela denied the allegations in court filings.
J.P. Morgan requested an injunction to prevent Cela from communicating with former clients pending the outcome of a separate arbitration case J.P. Morgan filed against him.
The company said Cela has been “aggressively soliciting” his former clients via telephone calls to do business with him at Wells Fargo, according to J.P. Morgan’s lawsuit, filed Feb. 28 in a federal court in New Jersey. The bank says more than a dozen clients have informed it that Cela has contacted them, according to the lawsuit, which does not name the clients.
Cela had worked as a bank-based financial advisor for J.P. Morgan in Cranford, N.J., where he managed $122 million in assets for 412 clients. Since he moved to Wells Fargo, five J.P. Morgan clients have transferred $8.5 million to his new employer, according to the lawsuit.
If not for his employment at J.P. Morgan, Cela “would not have had any
contact with the substantial majority of the clients the firm assigned to him and
whom he is now soliciting,” the bank’s lawsuit says.
Cela denied the allegations in a legal response to J.P. Morgan’s lawsuit, saying the bank presented no evidence that he solicited any clients. “JPMorgan provides no information about who these clients are, when or how they were allegedly solicited, and what was allegedly said,” Cela’s response states, adding that the bank had nearly an entire month since his departure to gather evidence to buttress its claims. His attorney filed affidavits from two of Cela’s clients saying they were not solicited to move accounts.
Cela’s legal response also argued that J.P. Morgan has filed other evidence-free nonsolicitation lawsuits against advisors only to be rebuffed by the courts.
“Importantly, this is not the first time that JPMorgan has rushed into court, including into this court, seeking a TRO on nothing more than hearsay and
double hearsay allegations, with no actual evidence,” Cela’s response states.
After hearing oral arguments on March 3, Judge Madeline Cox Arleo denied J.P. Morgan’s request for a temporary restraining order.
Cela’s legal battles, however, are not over. J.P. Morgan can still seek damages through the arbitration case it filed with industry self-regulator Finra.
Spokeswomen for Wells Fargo and J.P. Morgan declined to comment on the case. An attorney representing Cela, Tom Lewis of law firm Stevens & Lee, said his client was pleased with the judge’s decision and declined further comment.
Write to Andrew Welsch at [email protected]
