Finra denies J.P. Morgan effort to clamp down on breakaway brokers

Arbitrators also rebuffed brokers’ counterclaims of defamation and unfair competition

Finra arbitrators squelched J.P. Morgan Securities’ effort to clamp down on three registered representatives in Indiana who the firm alleged tried to steal its clients when they moved to Raymond James two years ago.

The brokerage alleged the reps — Nathan D. Shields, Mark V. Obrzut and Jackson M. Stewart — improperly solicited clients to move with them before and after they departed their practice at the firm’s office in Carmel, Indiana, to join Raymond James in August 2018. J.P. Morgan also alleged the three took confidential client information to Raymond James.

But in an Oct. 22 decision, a three-person Financial Industry Regulatory Authority Inc. arbitration panel denied J.P. Morgan’s request for $1.2 million in damages and $370,000 in attorneys’ fees.

The arbitrators also denied a counterclaim by the three reps.

They alleged J.P. Morgan launched a campaign to try to harm their careers and their personal reputations by making defamatory statements and refusing to tell their clients where they landed after leaving the firm, according to the arbitration decision. They sought damages of up to $132,041 for Shields, $303,282 for Obrzut and $584,760 in attorneys’ fees and costs.

J.P. Morgan declined to comment. Attorneys for the reps did not respond to a request for comment.

J.P. Morgan asked a federal court for a temporary restraining order against the breakaway reps in September 2018, which was denied. In December 2018, the firm and the reps agreed to an injunction against soliciting former clients.

The parties moved to Finra arbitration to seek damages against each other. The initial claim was filed in September 2018. The case was argued this year over 18 hearing sessions that began in January and ran through October. Several of the hearings were conducted via Zoom due to social distancing concerns related to the coronavirus pandemic.