J.P. Morgan Securities is seeking a temporary restraining order against a former financial advisor whom it accuses of stealing clients after moving to Wells Fargo Advisors Financial Network.
The complaint, filed in U.S. District Court for the Western District of Kentucky Owensboro Division on Friday, seeks to halt James A. Phelps Jr. of Newburgh, Ind., from soliciting JPMorgan’s clients, and from using the company’s confidential and proprietary business and client information.
The request for the temporary restraining order and a preliminary injunction is “pending resolution of an arbitration proceeding between JPMorgan and Defendant that concurrently is being filed with [the Financial Industry Regulatory Authority], dispute resolution,” the complaint said.
The complaint said that Phelps has already transferred eight JP Morgan households with assets totaling about $3.6 million.
Phelps had been with JPMorgan Chase in Owensboro, Ky., since 2008 (he began with Chase Investment Services Corp.), the complaint said. He resigned on October 4 and immediately signed on with Wells Fargo Advisors Financial Network (FiNet) in the same town.
Phelps, who joined the Bluegrass Wealth Advisors FiNet team, did not respond to a request for comment.
The complaint said that JP Morgan learned from clients that Phelps began trying to recruit them after he joined Wells Fargo. The contacts included calls on their personal cell phones and emails to their personal email addresses.
The complaint said Phelps mailed “solicitation packets” to at least four clients’ homes that contained documents including a “wedding style” announcement of his joining Wells Fargo; a relationship summary that provided information about Wells Fargo; and a Wells Fargo document titled “Regulation Best Interest Disclosure” that explained the “scope and terms of the brokerage services … and detailed the material facts relating to conflicts of interest that arise through our delivery of brokerage services to you.”
Three other clients, the complaint said, said that they received unsolicited emails from Phelps that included hyperlinks to “Form CRS: Relationship Summary” and the Wells Fargo document titled “Regulation Best Interest Disclosure.”
Phelps, the complaint said, breached his employment agreement with JP Morgan, which in part “contains provisions prohibiting him from soliciting JPMorgan clients for a period of one year after his JPMorgan employment ends and from using or retaining JPMorgan confidential information.”
The complaint said that Phelps had 330 clients/households with about $109 million in assets under management, most of which were either pre-existing at the time they were assigned to him or were referred to him by JPMorgan.
As a private client advisor, Phelps “was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan,” the complaint said.
A spokesperson for Well Fargo refused to comment.
Caroline Szyperski, a spokeswoman at JP Morgan, said, “We don’t have anything to add.”
