Edward Jones Seeks to Stall Broker Who Joined LPL
Edward D. Jones & Co. has asked a federal court to restrain a broker who affiliated with LPL Financial two weeks ago from contacting his former clients.
Andrew C. Stotler, who began his brokerage career in 2012 with Jones, “deceptively” removed lists of client contact information before his April 20 departure and made unsolicited phone calls to them, violating Missouri trade secret laws and the St. Louis-based firm’s one-year non-solicitation requirement, according to the filing in the U.S. District Court for the Eastern District of Missouri.
Jones seeks return of the lists and a ban on Stotler’s solicitation of former clients, pending the outcome of a parallel arbitration claim for damages and a permanent injunction that it filed with the Financial Industry Regulatory Authority.
Stotler, who was based in the St. Louis suburb of Pacific, Mo., had transferred $7 million of his $44 million book to his independent contractor office within ten days of his move, according to Jones.
Neither he nor a spokesman for LPL responded to requests for comment. LPL is not named as a party in the complaint, which was filed on Friday.
Jones’ brokers operate primarily out of single-advisor offices in small markets, and the firm has encouraged most of them to keep their branches open while refraining from meeting clients and prospects face to face during the virus crisis.
The strategy of seeking restraining orders against brokers in hopes of deterring clients from following in the essential early days of a move was developed by national brokerage firms with large branches. Many have curtailed the strategy to cut legal costs, but smaller bank-owned brokers, discount brokers and those like Jones with small-office models have in recent years picked up the ball.
Regions Bank won a TRO last month against two brokers who joined Raymond James Financial, but a Florida judge subsequently reversed his decision. (He cited several apparently misleading assertions by Regions, including one that the brokers moved during the pandemic in hopes that the courts would not be functioning.)
“By targeting current Edward Jones clients through unsolicited telephone calls, social media messages and personal visits, Stotler breached his employment agreement by using client information against firm policy,” a company spokesman said. “Edward Jones takes substantial precautions to protect client information.”
James Heavey, a New York-based employment lawyer who has represented former Jones brokers, said the timing of the suit is questionable.
“I think the judges and courts are very loath to entertain business disputes right now in the form of TROs,” he said. “An application for injunctive relief could really turn off the trier of fact in today’s environment.”