Edward Jones Says Broker Played Bait-and-Switch About His Firm
Edward Jones on Tuesday asked a federal judge to restrain a broker in a small Virginia town who joined Ameriprise Financial from contacting former clients, some of whom were unaware that he had put a new shingle on his former Jones office.
In seeking to stop Samuel “Ed” Clyburn, Jr., from soliciting the clients, Edward Jones suggested that he took advantage of his work-from-home status and a move of his Wytheville, Va. office earlier in the year to deceive some of them about who he was working for.
It also accused him of failing to inform his clients that he had moved his Edward Jones office to a new location in February while keeping the old address for his forthcoming independent brokerage practice with Ameriprise.
Since he had pre-scheduled appointments with several clients while at Jones, they “would not realize, until arriving [that] the appointment at the former branch office was actually an appointment at an Ameriprise Branch Office,” the complaint said.
Clyburn, whose Jones office was servicing more than $70 million of assets, succeeded in transferring more than $21 million to Ameriprise within 19 days of his move, according to the complaint. The broker has contacted at least 23 Edward Jones clients by phone, it said, and at least 22 others know about his transition.
Clyburn, whose BrokerCheck record said he worked for his entire ten-year career at Jones in Wytheville, did not return a call for comment.
Filings for temporary restraining orders by discount brokers and small-office firms such as Jones that are not members of the Protocol for Broker Recruiting proliferated in the past year, but they have been relatively rare since the pandemic has constrained work, courtroom and arbitration routines. Fidelity Brokerage Services last week sought a restraining order against a broker who joined Merrill Lynch, but its filing did not allege possible work-from-home subterfuges.
As is typical in such temporary restraining order and preliminary injunction claims, Edward Jones noted that it simultaneously filed a damages complaint with Finra Dispute Resolution against Clyburn.
The lawsuit does not name Ameriprise as a defendant, but alleged that the firm “instructs incoming recruits to compile client information from their former firm and input it onto a thumb drive, some other storage device, or into a third-party cloud-based system” before resigning. A client of another Edward Jones broker in Wytheville complained of being contacted by Clyburn, the suit said.
The suit makes the claim immediately after asserting that Clyburn left open on the day he resigned a file folder naming clients with minimum distribution requirements and their contact information and account balances.
An Ameriprise spokeswoman confirmed that Clyburn joined the firm’s independent “franchise” channel, but did not respond to a request for comment on the lawsuit’s assertions.
Employment lawyers said brokers should not be tempted to think they are shielded when working from home about employment contract non-solicit clauses and codes of conduct guidelines on confidentiality when planning moves.
Jones accused Clyburn of misappropriating “trade secrets” under federal and Virginia laws and of breaching his employment contract that prohibits solicitation of former clients within a year of leaving.
“It certainly will be a temptation for brokers,” said Brady Hermann, a lawyer at Boston-based Maurice Wutscher. “They need to be extra cautious as to the information that they’re pulling, anything that they’re keeping, because firms are keeping track. If there’s even the slightest bit of evidence that they were using this working from home to gather client information in anticipation of an employment move, firms will use this to their advantage.”
A spokesman at Edward Jones, which in May won a non-solicitation battle with a Missouri broker who affiliated with LPL Financial, said the firm took action after learning of Clyburn’s “misleading solicitations.”
“We were disappointed to learn that Mr. Clyburn failed to inform Edward Jones’ clients that he was no longer employed by our firm when he kept appointments with our clients that were scheduled to take place after he joined Ameriprise,” spokesman Alex Reed said in a prepared statement.