J.P. Morgan Securities and a former broker the firm sued for soliciting his old clients have agreed to move their dispute to an arbitration panel at the Financial Industry Regulatory Authority Inc.
On Tuesday, J.P. Morgan Securities filed a complaint and request for a temporary restraining order seeking to stop its former broker, Ryan C. May, from doing business with the firm's clients. The two sides signed a settlement Friday in which the firm dropped that request and both parties agreed to arbitration.
In the original complaint, J.P. Morgan Securities alleged that Mr. May, who is based in Illinois, was "aggressively soliciting J.P. Morgan clients to move their accounts" to him at his new firm, Ameriprise Financial Services Inc. Mr. May moved to Ameriprise in December after nearly 10 years at J.P. Morgan and a predecessor firm.
As part of the settlement, Mr. May is prohibited from soliciting J.P. Morgan clients. However, he can respond to inquiries from J.P. Morgan clients and can work with clients who transfer accounts to Ameriprise. As part of the agreement, he needs to keep a log of client inquiries and return to J.P. Morgan all records, documents and information about clients he had before he resigned.
About two dozen former J.P. Morgan clients, with more than $25 million in assets, have moved their accounts to Mr. May at Ameriprise, according to the complaint, which was filed in U.S. District Court in the Northern Division of Illinois. He had clients with a total of almost $160 million in assets "assigned" to him at J.P. Morgan, according to the complaint.
Mr. May said he could not comment on the matter because it was still ongoing. A spokeswoman for J.P. Morgan Securities, Elizabeth Seymour, also declined to comment.
"If the damage is already done and the assets are out the door, it's sometimes better for the firm to go to Finra arbitration," said James Heavey, a partner at Barton LLP. "And the firm gets what it wants, which is stopping the broker from calling clients."
Ameriprise and J.P. Morgan Securities, at least for some of its brokers,
remain in the broker protocol for recruiting agreement, which allows brokers to carry limited client information with them when they move to a new firm, provided they follow the guidelines laid out in the protocol agreement.
