JPMorgan is taking one of its former brokers to court, accusing him of “aggressively soliciting” its clients from his new perch at Merrill Lynch.
The bank claims advisor Manuel Ruiz, who joined Merrill Lynch on Sept. 19, has been violating a non-solicitation agreement he signed before his departure. It’s at least the fifth time this year that JPMorgan has sued a former advisor for alleged non-solicitation violations, and the third time it involves a broker who moved to Merrill Lynch.
Ruiz denies the allegations, insisting he has only spoken with clients rather than soliciting them. Those conversations have "followed the same general format."
“First, I told the client I had decided to move from Chase to Merrill Lynch. Second, I told them that Chase had been good to me, and I was good to Chase. Third, if they had any questions, I answered those questions truthfully,” Ruiz says in a court filing.
JPMorgan is asking a federal court in New Jersey to quickly grant a temporary restraining order while it pursues separate claims in arbitration. Ruiz has already transferred about $4 million of the $59 million in client assets he oversaw, according to JPMorgan.
“It appears Chase has just sued me because people decided to transfer assets,” Ruiz says in court filings.
The bank has had a mixed record of success pursuing these lawsuits. Two weeks ago,
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The advisor, a former employee, has been soliciting more than two dozen clients at the bank, JPMorgan says.
April 11 -
One JPMorgan client thought it was “odd and weird” that the advisor called during the Memorial Day holiday, on behalf of Merrill Lynch.
June 19 -
The advisors agreed not to solicit clients and to return confidential information to the bank.
September 5 -
The bank’s effort to show that the advisors violated non-solicitation agreements was “far from persuasive, never mind conclusive,” the judge ruled.
September 27
JPMorgan’s complaint against Ruiz mirrors aspects of its other lawsuits. The bank claims eight clients recounted receiving calls from Ruiz. He has allegedly told clients he has access to better investment options at Merrill Lynch, and has asked some clients to meet with him about doing business there, according to JPMorgan.
These and other actions violate non-solicitation agreements he signed as part of his employment at JPMorgan, according to the bank. The firm also accuses him of unfair competition and of misappropriating trade secrets in the form of client contact information.
Unlike J.P. Morgan Securities, the bank’s boutique wealth management unit, JPMorgan’s bank channel advisors are not covered by the Broker Protocol. Ruiz was one of these advisors, working in JPMorgan’s Chase Wealth Management unit in bank branches in Edison and Clinton, New Jersey.
Ruiz rejects JPMorgan's claims that he allegedly told clients that the bank was too limited in its offerings.
He also calls into question the thoroughness of JPMorgan’s investigation of its own allegations, saying that it does not appear to have done more than merely ask clients if they had spoken to him instead of whether he directly solicited them.
Ruiz claims to have been a member of JPMorgan's s retention teams — groups of advisors who call clients of colleagues who left to join rival firms.
“The members of the retention teams I served on were asked by management to call clients and simply ask whether the departed advisor had contacted the client. That was all we were supposed to ask the client, nothing more. We would put the client’s name on a spreadsheet and send it to management. It was from these documented ‘contacts’ that Chase would allege solicitations,” Ruiz says.
This is the second time Ruiz has worked at Merrill Lynch; he started his advisory career at the wirehouse in 2012, then moved to JPMorgan in 2014, according to FINRA BrokerCheck records.
But even though Ruiz had some experience at the wirehouse before working at JPMorgan, the bank is the one that gave him his clients —or so JPMorgan claims in its lawsuit.
The bank provides bank branch advisors such as Ruiz with client referrals, helping them build their books of business, JPMorgan says.. It points to millions spent on training, advertising and more. The bank’s “client list is the lifeblood of its business,” JPMorgan says.
A spokeswoman for JPMorgan declined to comment on the matter. And a Merrill Lynch spokesman speaking on behalf of the firm and Ruiz also declined to comment.
