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From Lunches with Dimon to $56-Mln Claim: Client Says J.P. Morgan Failed to Curb Broker

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There’s no such thing as a free lunch. But for one ultra-wealthy J.P. Morgan Advisors customer whose perks included dining with parent bank CEO Jamie Dimon, those meals may have cost him almost $56 million. 

The customer, a Texas businessman who has family ties to cattle ranching, oil and construction, alleges that J.P. Morgan Advisors failed to supervise one of its stars despite warning flags that the broker was engaged in excessive and unauthorized trading and misled clients about the risky assets and margin loan balances in their accounts, according to a complaint filed July 14 with the Financial Industry Regulatory Authority. 

The broker, Edward L. Turley, had generated as much as $30 million in annual revenue from $1.6 billion in client assets for J.P. Morgan from its San Francisco office, but the bank fired him last year as complaints poured in after the 2020 pandemic-triggered market crash. J.P. Morgan Advisors, rather than Turley, has been named the respondent to those claims.

The allegations raise concerns about the ways senior producers are given leeway even in an increasingly regulated industry and heightened compliance focus on Wall Street, according to the Texas claimant’s Boca Raton-based lawyer, Robert W. Pearce.

“This guy was flagged, but he was also bringing in a boatload of money every year,” Pearce said, referring to Turley. “The firm looked the other way.”

Turley has drawn over $100 million in claims altogether, including from the Texas client, Benjamin D. Winston, according to state regulatory records which identified the customer through businesses under his control. Four claims filed by other investors that had sought $46.4 million have resulted in $30.3 million in settlements by J.P. Morgan. Winston’s and two other client claims are still pending, representing roughly $78 million in combined damages.

Arbitrators in an eighth case showing on Turley’s BrokerCheck record ordered J.P. Morgan to pay $4 million in December. (The claimant of the awarded case, Lacey Winston Keath, is a member of Winston’s family, although she was represented by lawyers Samuel B. Edwards, in Houston, and Jeffrey R. Sonn, in Aventura, Florida.)

Turley was not named as a respondent in Winston’s arbitration complaint. Turley’s lawyer, Peter R. Boutin with Keesal, Young & Logan in San Francisco, said he could not comment on specific allegations because he had not been served with a copy of the claim. 

Ed Turley, a 28-year industry veteran in San Francisco, was fired from J.P. Morgan Advisors last year as complaints poured in after the 2020 pandemic-triggered market crash.
Ed Turley was fired from J.P. Morgan Advisors last year as complaints poured in after the 2020 pandemic-triggered market crash.

“Mr. Turley always endeavored to provide high quality professional service to his clients,” Boutin wrote in an email.

Turley’s mismanagement of the Winston accounts at issue resulted in $36 million in realized losses after the March 2020 market drop triggered mass liquidations of his holdings at “bargain-basement” prices, the complaint states. The total damages claimed assume the portfolio would have gained around $20 million over the same period if it were “well-managed.”

Winston was sold on Turley in part because he, like other upper-crust clients, was “whisked away” to New York City to dine with Dimon, who told him “how well-connected, wonderful, and respected” Turley was at the firm, according to the complaint. He had at least two lunches with Dimon, in July 2016 and September 2017, according to Pearce.

The complaint doesn’t state or imply that Dimon had any knowledge of Turley’s trading activity but says senior management at the brokerage unit had turned a blind eye to Turley’s transgressions, and gave him “carte blanche” to over-leverage customer accounts in the lead-up to 2020. 

As early as 2016, four years before the first client complaint was filed, firm compliance officials raised concerns about Turley’s order-taking practices and recommended outreach to his clients–but to no avail. 

Between 2017 and 2018, Turley had racked up the highest number of “Active Account Alerts” on J.P. Morgan’s computer surveillance system, according to Pearce and the complaint, which cited testimony from J.P. Morgan officials in prior cases. 

As the markets began to slide, J.P. Morgan officials also allegedly granted Turley’s request to suppress margin call alerts on some customer accounts, according to the complaint. As a result, he was able to sell off securities to raise more collateral without alarming Winston about the amount of leverage he had taken in their accounts, the complaint alleges. By February 2020, the debt-to-equity ratio in the claimant’s accounts was nearly three to one, Pearce said. 

A spokeswoman for J.P. Morgan declined to comment citing policy not to comment on pending litigation.

Turley was fired in August 2021, for “loss of confidence concerning adherence to firm policies and brokerage order handling requirements,” according to his BrokerCheck report. That was after a July 27, 2021 letter from the Oklahoma Department of Securities that “requested that JPM place Mr. Turley on heightened supervision considering pending customer arbitrations,” the complaint states. 

Winston, Turley’s client since 2012, generated at least $10 million in revenue for J.P. Morgan from the roughly $100 million worth of accounts he entrusted with the broker, according to Pearce and the complaint.

The two men shared a passion for aviation and had met at an Amelia Island, Florida meetup in 2011 of members of the Citation Jet Pilots (CJP) Owner Pilot Association, according to the complaint, which noted Turley would often fly his own jet to visit Winston but rarely got into the details of the client accounts. 

They would share “dinner, wine, card games, and each other’s company” with the client’s family, and the next day Turley would provide a report to Winston on his accounts that was “generally limited to the ‘Big Number;’ that is, reporting the net equity in the accounts and whether it had gone up or down,” the complaint stated. 

Turley, a 28-year industry veteran who had been with J.P. Morgan since 2009, has not been registered as a broker or investment advisor since his termination.

From Lunches with Dimon to $56-Mln Claim: Client Says J.P. Morgan Failed to Curb Broker
From Lunches with Dimon to $56-Mln Claim: Client Says J.P. Morgan Failed to Curb Broker
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