Edward Jones Wins TRO Against Broker Who Joined Ameriprise
A federal district court judge has granted Edward Jones’ request for a restraining order and injunction that temporarily prohibits a Henderson, Nevada-based broker who joined Amerirprise’s employee channel from contacting his former clients.The quick decision follows Jones’ request for judicial action last Friday after Mike Peterson, who ran a Jones office for 13 years, joined the rival firm on October 25th. Peterson contacted at least 11 former customers using confidential client data and sent transfer paperwork to at least 15 of them shortly after his arrival, according to the complaint filed in the U.S. District Court in the District of Nevada.
Judge James C. Mahan ordered the restrictions to extend for 14 days, preceding a November 25 session to determine if the TRO should be converted into a permanent injunction pending a decision in a parallel Financial Industry Regulatory Authority arbitration hearing.
Granting of the temporary restrictions allows Jones to get an expedited hearing schedule from Finra, under the regulator’s dispute resolution procedures.
In his response to Jones’ motions, Peterson denied taking trade secrets or violating provisions of his employee contracts. He also accused his former employer of rushing to court in order to “damage the advisor’s 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 brokers who left for rivals. In September, it sued John Kerr, a 21-year veteran in Indiana who joined a small independent firm. District Court Judge Sarah Evans Barker on Thursday denied Jones’ request for a preliminary injunction and TRO against the broker.
“Edward Jones takes seriously its obligation to protect the confidentiality of client information,” said a company spokesman, regarding the Peterson decision. He did not immediately respond to a request for comment on the Kerr decision, which is proceeding on a slower schedule in arbitration.
Peterson’s lawyers, Rex Garner and Danya Blair of Akerman LLP, denied Jones’ assertion that the broker had violated customer privacy even though he informed some of them of his move. “Announcing to customers that an advisor has changed firms is standard practice in the financial industry for advisors and their employing broker dealers,” they wrote in a law memorandum opposing Jones’ request.
Peterson sent account opening paperwork only to people who said they wanted to continue working with him, they wrote.
The short-term injunction “will not cause significant hardship to Peterson because he will still be able to continue working for Ameriprise,” Judge Mahan wrote in his order. “[H]e will be barred only from using Edward Jones’ trade secrets and confidential information and from soliciting Edward Jones’ current customers.”
Stephanie Esker, an Ameriprise spokeswoman, said the TRO was issued without the benefit of arguments or testimony from the broker.
“We look forward to having the full facts before the court and a panel of FINRA arbitrators,” she said.
Jones alleged that Peterson moved $15 million from 11 households in his early days with Ameriprise. He oversaw more than $100 million of client assets at his former firm, it wrote in its initial motions for the injunction and restraining order.