JPMorgan has swung and missed in its attempt to recoup nearly $40 million from a now-barred broker at the heart of a series of multi-million dollar settlements with clients.
A Financial Industry Regulatory Authority arbitration panel on Friday denied JPMorgan's request for roughly $39.8 million in damages from Edward Turley, a former broker at the firm who was booted from the industry in 2022 for failing to cooperate in a FINRA investigation. Turley's BrokerCheck page lists 13 customer complaints against him.
Twelve of those complaints were settled by J.P. Morgan Securities (the brokerage business the megabank acquired from Bear Stearns in 2008) between 2020 and this year for a total of $63.2 million. Turley denied the earliest of the 13 complaints, which was filed in 1999 when Turley was at Lehman Brothers.
Rather than allot JPMorgan the damages it had requested, the three-member FINRA arbitration panel overseeing the case awarded Turley $521,000 to cover his attorneys' fees and other costs. In approving that amount, the arbitrators cited California statutes providing reimbursement of legal expenses. As is common in FINRA arbitration decisions, the panelists did not go into their reasons for the decision.
The award notes that J.P. Morgan Securities accused Turley of breach of contract, breach of fiduciary duty and unjust enrichment.
"The causes of action related to Claimant's allegation that Respondent was a former financial advisor with Claimant who unjustly enriched himself by brazenly lying to Claimant and breaching its policies over several years," according to the award.
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JPMorgan declined to comment on the award. Turley's lawyer, Andrew Harvin of Doyle, Restrepo, Harvin and Robbins in Houston, said his colleagues and his client were "very pleased that Ed has been vindicated."
"It shows this claim by JPMorgan should have never been brought in the first place," he said.
Lou Straney, a regulatory expert at Arbitration Insight, said it's highly unusual for a broker to prevail against a firm's claims in a case like this. He said he wouldn't be surprised if JPMorgan tries to appeal the decision.
Straney said the award makes Turley almost seem like an innocent bystander.
"But he's been barred by FINRA," Straney said. "That alone is usually enough to get you pretty far down the road and for the firm to be able to recover some money."
Turley was a star broker at JPMorgan, generating about $30 million a year from $1.6 billion in assets under management, according to a detailed briefing of the case posted on the website of the Law Offices of Robert Wayne Pearce. Pearce represented several former clients of Turley's, including one in Texas who filed a claim for $55 million for unsuitable trading, misrepresentation and other alleged violations. Pearce, who declined to comment for this article, wrote that Turley would visit the wealthy client in Texas about once a quarter by flying his own jet across the country to "wine, dine, and curry favor" with him and his family.
Turley logged 28 years in the securities industry before being fired by JPMorgan in August 2021 over a "loss of confidence concerning adherence to firm policies and brokerage order handling requirements," according to BrokerCheck. He was barred by FINRA in November the following year after refusing to provide testimony concerning "trading in customer accounts, including but not limited to the use of foreign currency and margin, and the purchasing and selling of high-yield bonds and preferred stock."
Turley started his career at Morgan Stanley in 1988. He moved to CS First Boston — an investment bank under Credit Suisse — in 1992 and then Lehman Brothers in 1995. His move to J.P. Morgan Securities came in 2009.
