Finra Arbitration Panel Squashes TRO Against Ex-Jones Broker
A former Edward Jones broker who agreed to a temporary restraining order three weeks ago prohibiting him from telling customers about his move to Ameriprise won an unusual victory on Wednesday when a Finra arbitration panel ordered the parties to have a court dismiss the TRO.
The court had granted the TRO on November 12 after Jones filed its motions to restrain him on an ex-parte basis, meaning it did not give Peterson and Ameriprise notice of its filing.
The arbitrators made their decision after seven witnesses presented sworn testimony, according to the joint motion to dissolve the TRO.
“That’s a fairly drastic remedy for a Finra panel, so this leads me to believe that the Finra panel was fairly upset with the evidence that Edward Jones had presented to the court,” said Thomas B. Lewis, a lawyer at Stevens & Lee in Princeton, N.J., who was not involved in the case.
“It is disappointing that the Finra arbitration panel declined to make that temporary order permanent,” said a Jones spokesman. “Edward Jones takes seriously its obligation to protect the confidentiality of client information and will continue to vigorously pursue its claims for damages against Peterson and Ameriprise in arbitration.”
Peterson in earlier filings to the court denied Jones’s allegations that he took “trade secrets” or otherwise violated provisions of his employee contracts, even though he told some former customers that he had moved to Ameriprise on October 25.
“Announcing to customers that an advisor has changed firms is standard practice in the financial industry for advisors and their employing broker dealers,” his lawyers had unsuccessfully argued to the Nevada court.
Jones alleged that the broker contacted at least 11 former customers using confidential client data and sent transfer paperwork to at least 15 of them shortly after his arrival. He accused his former employer of rushing to court to “damage [his] reputation, disrupt his transition to a new firm and prevent customers from communicating with their trusted advisor of many years.”
Jones, which has been rapidly expanding its network of mostly single-broker offices in almost 15,000 locations, is not a member of the Protocol for Broker Recruiting and has taken aggressive action this year against several brokers who left for rivals.
“We are pleased that the panel had the opportunity to hear Mr. Peterson’s case and agreed with his position based on the facts of the matter,” said an Ameriprise spokeswoman.
In September, a federal judge in Indiana issued a strongly worded rejection of Jones’ motion to sue a 21-year veteran who left in August to start an independent practice. She made a distinction between the illegal solicitation of clients and simple announcement of the move, leading several lawyers to say it could be an important precedent.
In her order in the earlier case, District Court Judge Sarah Evans Barker scolded Jones for its “apparent inconsistency” in seeking a court-ordered remedy when it encourages its new advisors to send out affiliation announcements to prospects and clients.
“I would suggest anyone interested review the opposition papers and decisions in the recent successes against Edward Jones,” said James Heavey, a New York lawyer who represented the Indiana broker as well as Ameriprise in the Nevada case.