Newsletter Signup

Search Our Blog

JPMorgan Loses FINRA Claim Against Departing Representatives

By Joseph M. Mellano, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, October 30, 2020.

On October 22, 2020, a panel of FINRA arbitrators rejected claims brought by JPMorgan against three registered representatives—Nathan Shields, Mark Obrzut, and Jackson Stewart—who left the JPMorgan for Raymond James in 2018.

The basic facts of the dispute are familiar to those in the financial services industry. Shortly after the three representatives departed the firm, JPMorgan filed a FINRA claim against them and Raymond James, alleging the representatives misappropriated JPMorgan’s trade secret and proprietary information by taking client information with them to Raymond James and improperly soliciting JPMorgan clients before and after they departed. The representatives responded that JPMorgan’s claims were baseless and filed counterclaims against the firm for defamation, unfair competition, and tortious interference with business relationships arising out of its efforts to stop clients from transferring their accounts to Raymond James. JPMorgan sought damages and attorneys’ fees totaling approximately $1.5 million. The representative sought damages on their counterclaim of approximately $1 million.

Following a six-day Zoom hearing, the panel issued an award denying JPMorgan’s claims and the representatives’ counterclaims and ordering the parties to split the costs of the hearing. The full text of the panel’s ruling is available here.

Though the representatives successfully defended against JPMorgan’s claims, the decision nonetheless serves as a reminder of the dangerous and uncertain waters representatives face when transitioning to new firms. Representatives who are considering moving to new firms should consult with legal counsel to ensure they understand their rights and the risks they face.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. 
We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. 
Attorney Joseph M. Mellano can be reached in the firm’s San Diego office at (619) 696-9500. 

Share This Article linkedin