JP Morgan Securities Whiffs In FINRA Arbitration Against Raymond James and Three Former Employees

October 26, 2020

You may have read about the "record" $920 million DOJ, SEC, CFTC settlement on September 29, 2020, for spoofing and manipulation involving JPMorgan Chase & Co., J.P. Morgan Chase & Co., JPMorgan Chase Bank, N.A. and JPMorgan Securities. Maybe that conglomerate will figure out whether to put or not to put spaces between its various Js, Ps., and Morgans? Be that as it may, "Bad Boy" or not, J.P. Morgan Securities LLC still opted to go, hammer and tong, after three former employees. Much like the firm's recent regulatory travails, this particular piece of FINRA arbitration didn't go all that well either.

For a trip down recent, memory lane:

Case In Point

In a FINRA Arbitration Statement of Claim filed on September 11, 2018, FINRA member firm Claimant J.P. Morgan Securities LLC asserted breach of contract, misappropriation of trade secrets and confidential information, conversion, breach of fiduciary duty, breach of duty of loyalty, intentional interference with actual and prospective economic advantages, negligent interference with actual and prospective economic advantages, aiding and abetting breach of fiduciary duty/duty of loyalty, inducing breach of contract, tortious interference with contract and common law obligations, and unfair competition. In the Matter of the Arbitration Between J.P. Morgan Securities LLC, Claimant, v. Raymond James & Associates, Inc., Nathan D. Shields, Mark V. Obrzut, and Jackson M. Stewart, Respondents (FINRA Arbitration Award18-03204)
As alleged in part in the FINRA Award:

[T]he causes of action relate to Claimant's allegation that Shields, Obrzut, and Stewart (collectively, the "Individual Respondents"), both before resigning from Claimant's employ and after commencing employment with Raymond James, engaged in improper solicitation of Claimant's clients. Claimant further alleges that the Individual Respondents improperly took Claimant's confidential client information to Raymond James.

Respondents generally denied the allegations, asserted various affirmative defenses, and filed Counterclaims asserting  defamation, tortious interference with business relationships, and unfair competition. As alleged in part in the FINRA Award:

[T]he causes of action relate to the Individual Respondents' allegation that following the resignations of the Individual Respondents, Claimant launched a campaign to destroy their careers in the financial services industry, as well as their personal reputations, by, among other things, making defamatory statements about them, refusing to identify their new employer to their clients, and initiating baseless litigation against them.

Moving Along

It was not a straight path to a FINRA arbitration hearing but one that twisted and turned through the courts. As asserted in the FINRA Arbitration Award:

On September 27, 2018, Claimant filed a court Order denying its Motion for Temporary Restraining Order against the Individual Respondents. On December 11, 2018, Claimant filed a court Order granting its Motion for Preliminary Injunction against the Individual Respondents. On December 17, 2018, the parties filed a Stipulated Injunction and Order for the Panel's consideration. On January 10, 2020, the Panel executed the Stipulated Injunction and Order. Thereafter, this matter remained open on all remaining issues and damages. 

On December 9, 2019, Respondents filed a Motion for Sanctions Against Claimant for Failure to Comply with Discovery Order ("Motion for Sanctions"). On December 19, 2019, Claimant filed an opposition to the Motion for Sanctions. On December 24, 2019, Respondents filed a Reply in Support of the Motion for Sanctions. In an Order dated December 30, 2019, the Panel ruled that arguments on the Motion for Sanctions would be heard at the evidentiary hearing.

The Permanent Injunction

At the FINRA arbitration, Claimant JP Morgan sought compensatory, punitive, and exemplary damages plus fees and costs; and further requested a Permanent Injunction and attendant orders, which are, in part, characterized in the FINRA Arbitration Award:

A. A permanent injunction enjoining and restraining the Individual Respondents, directly or indirectly, and whether alone or in concert with others, including but not limited to any director, officer, agent, employee and/or representative of Raymond James, from: 

(1) soliciting, attempting, to solicit, inducing to leave or attempting to induce to leave, through August 3, 2019, any client of Claimant serviced by the Individual Respondents at Claimant or whose name became known to the Individual Respondents by virtue of their employment with Claimant (or any of its predecessors in interest); and 

(2) using, disclosing, or transmitting for any purpose Claimant's documents, materials and/or confidential and proprietary information pertaining to Claimant, Claimant's employees, and/or Claimant's clients; 

B. A permanent injunction enjoining and restraining Respondents, directly or indirectly, and whether alone or in concert with others, from using, disclosing or transmitting for any purpose any confidential or proprietary information belonging to or concerning Claimant (or any affiliates or predecessors in interest), its clients or employees, that was provided to Raymond James by the Individual Respondents; 

C. An order directing Respondents, and all those acting in concert with them, including but not limited to the directors, officers, employees, and agents of Raymond James, to return to Claimant all records, documents, and/or information in whatever form (whether original, copied, computerized, electronically stored, or handwritten), pertaining to Claimant's (or its affiliates or predecessors in interest) clients, employees, and business in the possession, custody, and/or control of Respondents; . . .


At the arbitration hearing:

  • Claimant JP Morgan sought $1,160.498.00 in compensatory damages, $370,000.00 in attorneys' fees, punitive damages in an amount to be determined by the Panel, and all FINRA costs; and
  • Respondents sought per se damages, $44,013.95 - $132,041.85 in compensatory damages to Nathan D. Shields, $101,094.20 - $303,282.60 in compensatory damages to Mark V. Obrzut, and $584,760.48 in attorneys' fees and costs.
ZOOM-ing Along

In response to the COVID-19 pandemic, the FINRA Arbitration was conducted via ZOOM hearings on September 14 - 18, and on October 16, 2020.


The FINRA Arbitration Panel denied Claimant JP Morgan's claims and Respondents' Counterclaims. Pointedly, the arbitrators denied all motions for sanctions. The Panel assessed, in part, $11,812,50 in hearing sessions fees against Claimant and the same amount against Respondents. 

Bill Singer's Comment

After nearly four decades on Wall Street, I am still amazed that FINRA would open its arbitration forum's doors to the likes of a member firm that was slammed with nearly a billion dollars in fines for market manipulation by DOJ, SEC, and CFTC. As is far too often the case, there's not much in the way of consequences for the industry's "Bad Boys," particularly when one of those Bad Boys is a FINRA Large Member Firm.