Edward Jones Seeks TRO Against Ohio Broker Who Went Independent
In another sign that litigation tactics adopted by wirehouses to curb departing brokers from calling former clients are not limited to the big-firm business model, Edward D. Jones on Friday asked a court to issue a temporary restraining order and injunction against a broker who left last month to affiliate with independent broker-dealer Cambridge Investment Research.
In a filing in federal court in the southern district of Ohio, Jones accused David G. Snow of “actively and deceptively” printing out a list of clients and 262 client statements while still employed. He contacted some clients after leaving his Jones office on October 11, according to the complaint and to affidavits filed by the branch office administrator of the Springfield, Ohio, Edward Jones office where he had worked for less than four years.
Snow’s actions violated federal and state “trade secrets” laws as well as his employment contract and other signed agreements with Jones, the firm alleged.
Reached at the office of Retirement Wealth Strategies, an independent firm founded in 2003 that transacts through Cambridge, Snow declined to comment on the allegations or on how he will respond to his former firm’s efforts to stymie his customer-contact effort.
“As a firm supporting independent financial professionals, we do not comment on matters related to litigation,” a spokeswoman for Cambridge said in an e-mail.
Edward Jones asked the Ohio court to issue a temporary restraining order and award other “injunctive relief. It also concurrently filed a request for a permanent injunction and damages in an arbitration complaint it filed concurrently against Snow on Friday.
Securities industry employment lawyers frequently warn brokers that they must abide by the letter of their employment contracts and compliance manual review attestations to avoid firms’ increasingly aggressive efforts to keep customers in-house.
Requests for temporary restraining orders were a common tactic that large firms such as Merrill Lynch, Morgan Stanley and UBS deployed against each other when brokers jumped among them in order to keep customers in-house. The firms signed an effective truce known as the Protocol for Broker Recruiting in 2004 and 2005 aimed at lowering their skyrocketing litigation costs and complying with privacy laws, but both wirehouses and smaller firms have again been litigating since Morgan Stanley and UBS last year departed from the pact.
The large firms focused primarily on veteran brokers with large books of business, but they along with discount brokers and firms like Jones have been pursuing even inexperienced advisors who allegedly jump ship with customer contact information in hand.
In April, Jones convinced a Texas court to issue a temporary restraining order against a broker in Texas who joined an independent broker-dealer while it filed for $1 million in damages from him in arbitration. A spokesman at Jones, which is not a member of the Protocol and which operates primarily through single-broker branches in more than 13,000 branches, did not immediately respond to a request for comment on the new filing.
Fidelity Investments, a discount broker, last summer won injunctions against a broker in Connecticut who joined an RIA and against an Arizona team who affiliated with LPL Financial. Charles Schwab Corp. has similarly pursued brokers who left its branches and call centers for other firms.