Edward Jones Asks Court to Curb Business of Broker Who Jumped
Edward D. Jones & Co. has sued a broker who spent his 21-year career running an Indiana office for the firm, alleging he violated his employment agreements by taking client information with him when he left last month to join an independent broker last month.
John M. Kerr has moved about $2 million of the $113 million he had been managing for clients from his Westfield, Indiana, office since affiliating with Thurston Springer Financial, an Indianapolis-based independent broker-dealer, Jones asserted in a complaint filed Friday in U.S. District Court in the Southern District of Indiana.
It seeks a temporary restraining order and injunction blocking him from contacting his former clients and requiring him, among other things, to return—and stop using—three client lists he allegedly printed the day before he left Jones under pressure. He resigned on August 1 “in lieu of being terminated” for unspecified disciplinary issues, according to the complaint.
Kerr, who joined Thurston Springer on August 2, declined to comment on the lawsuit—which Jones complemented with a Financial Industry Regulatory Authority arbitration complaint against him—or his reasons for leaving Edward Jones.
Jones, which typically serves middle-class Americans from single-broker offices, is among a group of firms aggressively seeking to tie the hands of brokers who leave for new firms by alleging violations of employment contracts and laws aimed at protecting customer privacy. Wirehouses such as Merrill Lynch years ago would almost reflexively seek TROs against large brokers who joined competitors have generally backed away from such litigation while Jones and discount brokerages such as Charles Schwab have picked up the litigation slack.
“The actions of defendant have damaged the financial viability of the Edward Jones’ Westfield, Indiana, office because he has solicited Edward Jones customers representing a significant amount of assets,” the St. Louis-based brokerage firm said in its complaint.
Jones, the largest U.S. broker-dealer as measured by its more than 17,000 brokers, is not a member of the Protocol for Broker Recruiting that allows brokers to take limited client contact information with them when moving to other signatory firms.
The St. Louis-based firm in April filed for a TRO, injunction and arbitration against James Loyet, a Nebraska broker who had been managing $147 million in client assets and left after 16 years. Loyet had not registered with another firm at the time, but affiliated with Ameriprise Financial Services in July after a court denied the TRO and temporary injunction requests.
In the complaint against Kerr, Edward Jones said he mailed information packets about his new firm to an unspecified number of clients and “explicitly asked” at least one to transfer assets. The lists that he allegedly illegally printed out ranked his former customers by commissions and by assets, according to the complaint.