JPMorgan lashes out again in court against departed bank-based advisor

JPMorgan is adding to its recurrent legal actions against former bank-based advisors with a lawsuit questioning a recent defector's right to move clients he met largely through bank referrals.

JPMorgan filed a lawsuit on Wednesday in federal court in Chicago seeking a temporary restraining order against Alan Feutz, a one-time private client advisor who left the firm last month to join the LPL Financial affiliate Genesis Wealth, which holds itself out as a destination for bank-based advisors leaving large Wall Street firms. It was just the latest suit JPMorgan has filed against former advisors it accuses of trying to poach clients they never would have had without referrals from the firm's bank.

LPL Financial

A press release announcing Feutz's move said he was overseeing $725 million in client assets at the time of his departure, but JPMorgan's lawsuit puts the total at $692 million managed for 351 households. The suit says Feutz has since managed to move $146 million of those assets and 23 of those households to LPL and accuses him of violating a nonsolicitation agreement barring him from trying to win the business of former clients for a year after leaving. JPMorgan also accuses him of persuading another private client advisor, Adrian Little, to resign and join him at LPL.

As in other recent legal actions against its former private client advisors, JPMorgan alleges Feutz has sought to make off with client relationships that he did little to build on his own.

"Feutz sat at his desk at JPMorgan Chase bank branches and was introduced to hundreds of existing bank clients (with or without investment accounts) to offer and provide access to investment opportunities through Chase Wealth Management," according to the suit. "As a Financial Advisor and a Private Client Advisor, Feutz was not expected to engage in cold calling or attempt to build a client base independent of referrals from JPMorgan."

Feutz plans defend himself 'vigorously'

The temporary restraining order JPMorgan is seeking would prohibit him from reaching out to former clients until the disputes can be resolved before a Financial Industry Regulatory Authority arbitration panel.

Feutz's lawyer, Jim Garvey of Vedder Price in Chicago, said JPMorgan's allegations are unfounded and Feutz tends to defend himself "vigorously."

"We are confident that he will prevail after a full vetting of the facts before a FINRA Dispute Resolution arbitration panel, just as we have prevailed on behalf of other clients who have had to endure JPMS' anticompetitive conduct by bringing claims of this type," Garvey said.

JPMorgan did not return a request for comment. Nor did LPL Financial, which is not named in the suit.

JPMorgan's many suits against former private client advisors

JPMorgan's other recent legal actions against former private client advisors contain virtually identical language. The defendants in those actions include:

• Angel Ayala, a former private client advisor who left JPMorgan in December to join Wells Fargo in Oakhurst, New Jersey;
• Henry Robert Gleckler IV, who left in November to join Morgan Stanley in Garden City, New York;
• Matthew Madera, who left in October to join Genesis Wealth in the Chicago suburb of Bolingbrook, Illinois;
• Brandon M. Love, who left in August to join UBS in the Detroit suburb of West Bloomfield, Michigan;
• Laura Sullivan, who left in May to join Morgan Stanley in Farmington Hills, Michigan; and
• Matthew McCrea, who left in April to join Wells Fargo in Las Vegas.

Jason Diamond, the president of the recruiting firm Diamond Consultants, said there was a time when firms wouldn't even bother trying to pull bank-based advisors from their competitors. Not only was there a high risk of being sued but also greater difficulty in moving over clients who are entangled in a banking relationship with the original firm.

Most bank-based advisors are wise enough to consult a lawyer before even seriously contemplating a move. But that doesn't stop them from getting sued.

"I just think a lot of times there are more gray areas," Diamond said. "What is the genesis of the client relationship? Did you solicit that relationship, or did the client call you? There are more points where if the firm really wants to make your life difficult, they seem to have a better ability to do so with private bankers than with traditional financial advisors."

A suit doesn't necessarily mean a recruiting deal failed

Diamond said a lawsuit isn't necessarily a sign that a particular recruiting deal was a failure. Most legal disputes in these cases are settled before going into FINRA arbitration, and the results are never made public.

"There are plenty of successful transitions where advisors have been hit with a TRO or some form of threatening litigation from the firm, and it's a nuisance and it's an inconvenience," he said. "But the transition is still a success."

Several of JPMorgan's recent suits have indeed already resulted in settlement deals or in the defendant advisors agreeing to accept a restraining order. Besides violating nonsolicitation agreements, the private client advisors in the suit are accused of not doing enough to make sure client information remains confidential.

JPMorgan stresses time, money spent on cultivating clients

The lawsuit says that Feutz would never have been able to reach out to his former clients if he hadn't retained client phone numbers and similar information after departing. According to the suit, Feutz brought no client relationships to JPMorgan when he joined in 2005 and built his advisory business primarily by working with the firm's existing customers, many of them sent to him from its bank.

The suit says that JPMorgan "has invested substantial time and money, totaling millions of dollars, to acquire, develop and maintain its clients over many years."

"It typically takes many years of dealing with clients for JPMorgan to become their primary investing firm," according to the suit.

"JPMorgan clients typically remain with and continue to be serviced by the firm, regardless of

whether the Private Client Advisor or other team members resign or leave JPMorgan," the suit says. "But for his employment with JPMorgan, Feutz would not have had any contact with the vast majority of the clients the firm assigned to him and whom he is now soliciting."

JPMorgan maintains the Broker Protocol doesn't apply

Many recruiting deals in wealth management are governed by a voluntary pact among firms known as the Broker Protocol, which generally allows departing advisors to take client names, addresses, phone numbers, e-mail addresses and account titles without fear of legal consequences. JPMorgan belongs to the protocol but has long maintained it doesn't apply to its private client advisors, largely because of their heavy reliance on bank referrals.

Feutz came to JPMorgan from Northern Trust Securities, where he was for about a year. Before that, he was at American Express Financial Advisors and Dean Witter, where he began his career in 1999.

The advisor he allegedly solicited to move with him to LPL, Adrian Little, began his career at JPMorgan in 2009. She is listed on Genesis Wealth's website as an LPL Registered Client Service Associate.

Genesis Wealth was founded in 2024 as part Professional Wealth Advisors, another LPL affiliate, and now has more than $3 billion in client assets. It's technically a branch of LPL and uses LPL as its broker-dealer.