By Charles Toutant, From New Jersey Law Journal

JPMorgan Chase Bank has sued six former wealth managers who quit en masse to join competitor Morgan Stanley and are allegedly soliciting their $2 billion base of former clients to follow them.

Dozens of JPMorgan clients formerly served by the six defectors have reported receiving calls from them every few days, and the defendants have made disparaging and defamatory statements about JPMorgan’s products and services in an effort to convince clients to move their accounts, the suit claims.

The defendants breached nonsolicitation and confidentiality provisions of their employment agreements with JPMorgan, as well as their common-law obligations and terms of the company’s long-term incentive plan, the suit claims. JPMorgan seeks a temporary restraining order and permanent injunction against solicitation of its clients and employees, as well as the return of confidential and proprietary business and customer information.

The vast majority of the accounts that the defendants were responsible for at JPMorgan were assigned to them by the company, rather than brought in by the wealth managers themselves, the suit claims. But as a result of the defendants’ solicitations, JPMorgan clients with roughly $30 million in assets have announced their intention to move their accounts to Morgan Stanley, the suit claims.

Clients of JPMorgan have stated the defendants have falsely claimed that the company would begin serving their accounts with a “call center” instead of private bankers, the suit alleges.

After the six defectors announced their resignation, JPMorgan wrote to their attorney to demand the return of confidential client information, and as a result the defendants returned more than 1,000 pages of confidential and proprietary files, the suit says. But JPMorgan believes the defendants still possess additional client information, such as names, addresses and phone numbers, which were used to contact and solicit former clients, according to the suit.

Among the documents JPMorgan alleges are missing are a list of approximately 200 endowments and foundations in New Jersey, including clients and prospects, with more than 2,500 individual names; a list of more than 600 prospects with assets in excess of $100 million based on their employment with private companies in New Jersey; and a list of JPMorgan prospects, with more than 1,000 names.

The suit was filed in conjunction with a related arbitration with the Financial Industry Regulatory Authority.

The six defendants, who worked in JPMorgan’s Morristown office, are vice presidents Michael Pudlak and Lori Rabinowitz; managing directors Michael Reynolds and Steven Christensen; and executive directors Mead Briggs III and Jason Meyer. All six announced to JPMorgan that they were resigning Feb. 3, and joined Morgan Stanley at various times from March 13 to May 5, the suit claims.

The defendants signed documents when they joined JPMorgan in which they agreed, for a 12-month period after the end of their employment, not to solicit the company’s customers with whom they had professional contact or with respect to whom they were privy to any information during the last two years of their employment with the company, the complaint claims.

The counts in the suit include breach of contract, misappropriation of trade secrets, breach of fiduciary duty, breach of duty of loyalty, intentional and negligent interference with actual and prospective economic advantage, and conversion.

A lawyer for the defendants, Jonathan Thau of Luboja & Thau in New York, and JPMorgan’s lawyer, Anthony Paduano of Paduano & Weintraub in New York, did not return calls seeking comment. Defendant Pudlak and Morgan Stanley spokeswoman Christine Jockle declined to comment.

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