Arbitrators decided in favor of Edward D. Jones & Co. in its long-running dispute with Ameriprise Financial and one of its brokers involving trade secrets, AdvisorHub reported..
Edward Jones alleged that broker Cory J. Clem and Ameriprise conspired between October 2022 and January 2023 to misappropriate confidential trade secret information and solicit clients to join Clem’s new firm while he still worked at Edward Jones. He joined Ameriprise in January 2023, after having been fired by Edward Jones over concerns regarding “misuse of client information and failure to be forthcoming during an internal review relating to the same.”
A panel of Financial Industry Regulatory Authority arbitrators ordered Ameriprise and Clem to pay nearly $4.8 million to Edward Jones. Clem individually will have to pay over $2.7 million in damages and costs while he and Ameriprise were held jointly responsible for over $1.6 million in damages and fees. Ameriprise was also ordered to pay $375,000 in punitive damages, according to the award. No reason was given by the panel for its decision, which is customary.
The award followed a three-year arbitration process, and reverses an earlier court victory for Clem, AdvisorHub reported. In 2023, Edward Jones filed suit seeking a temporary restraining order that would have prevented Clem from contacting or soliciting former clients.
Edward Jones alleged that a junior broker photographed computer records showing Clem had uploaded names, addresses, email addresses and phone numbers for 321 clients to a cloud-based transition program before leaving the firm. Clem argued that he did not use the information after his departure and instead relied on publicly available information to announce his move. Ameriprise also denied the allegations.
In that case, a federal judge declined to grant the temporary restraining order after finding that Edward Jones had not shown Clem misused client information.
Ameriprise contended in a counterclaim that Edward Jones’ suit was “nothing more than an abuse of process intended to intimidate its former advisors and competitor” and “interrupt and interfere” with “longstanding client relationships.” Clem also accused Edward Jones of tortious interference, defamation and conspiracy.
The panel of two public and one non-public FINRA arbitrators denied both counterclaims as well as Edward Jones’ request for a permanent injunction requiring Ameriprise and Clem to return any client information and prohibit them from further contacting or soliciting clients.
A spokesperson for Ameriprise said the firm disagrees with the award. “We remain focused on supporting advisor transitions in a manner consistent with industry standards and obligations while providing an exceptional client experience,” the spokesperson said.
A spokesperson for Edward Jones said the firm welcomed the arbitrators’ decision. “The decision affirms our position and sends a clear message that the protection of client relationships, confidential information, and fair competition matters.,” the spokesperson said.
Clem’s lawyer, David A. Gehn with Fox Rothschild in New York City, did not respond to a request for comment.
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