Three is enough for JPMorgan.
That's how many clients advisor Michael Bale allegedly persuaded to transfer accounts from the bank to Merrill Lynch where he now works, according to a JPMorgan lawsuit filed earlier this month. JPMorgan claimed Bale, who serviced 352 clients before leaving the bank in January, violated non-solicitation agreements.
This week the bank and Bale agreed to a stipulated injunction temporarily barring him from soliciting JPMorgan clients to join him at his current firm, pending the outcome of a FINRA arbitration case.
The legal tussle represents the latest effort by a brokerage firm to enforce non-solicitation agreements against advisors. JPMorgan had accused Bale of non-solicitation violations in its lawsuit filed in a federal court in New Jersey.
Bale worked as a private client advisor in a bank branch in Park Ridge, New Jersey until he resigned Jan. 15 to start employment at Merrill Lynch. While at JPMorgan, Bale was responsible for approximately $143 million in total assets under management, according to JPMorgan.
Bale’s attorney, Louis Lagalante, declined to comment on the case. A JPMorgan spokesperson also declined to comment.
Echoing
Without naming clients or specifying how many, JPMorgan alleged that its customers told the bank that Bale called them, sometimes on their personal cell phones, trying to persuade them to move. Furthermore, the bank claimed Bale told clients that Merrill Lynch offered more products than JPMorgan and told them that he could better service their accounts at his new place of employment, according to court documents
Pressing the bank for examples of non-solicitation violations, the judge cut off JPMorgan’s attorney: “you are dancing all around my question.”
In addition, JPMorgan claimed that Bale improperly took client contact information with him when he moved to Merrill Lynch. Most of JPMorgan’s business units are not members of the Broker Protocol, which permits advisors to take basic client contact information with them when switching between member firms.
Bale, who began his financial services career by working for a year at Merrill Lynch before joining JPMorgan in late 2011, signed a one-year non-solicitation agreement in 2013, according to JPMorgan’s complaint.
“The only prior industry experience Bale had, on information and belief, was that he worked at Merrill Lynch for less than a year in Fort Lee, New Jersey,” reads the bank’s complaint. “On information and belief, had Bale been able to build his own book of business at Merrill Lynch he would not have moved to JPMorgan. Accordingly, Bale brought few if any clients with him to JPMorgan,” the court document reads.
JPMorgan said that its bank-based advisors, by virtue of their employment at the firm, are introduced to hundreds of prospective clients. The bank expends considerable efforts to develop and service these clients, it said.
“As a private client advisor, [Bale] was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan. The substantial majority of the clients [Bale] serviced at JPMorgan were assigned to him by JPMorgan or were referred to him by JPMorgan Chase,” the bank said in court documents.
Judge Madeline Cox Arleo signed the stipulated agreement between Bale and JPMorgan on Feb. 10.
Like other firms that are not members of the Broker Protocol, JPMorgan has been known to sue departing advisors over alleged non-solicitation violations. Firms typically succeed in securing temporary restraining orders, but not always. Last year, a judge knocked down JPMorgan’s request for a TRO against one of its former advisors, who left to join Ameriprise. The judge was critical of
