FINRA arbitration panel orders Edward Jones to pay damages to former broker

On Behalf of | Nov 12, 2021 | Firm Transition

A Financial Industry Regulatory Authority arbitration panel has ruled in favor of a former broker for Edward D. Jones & Co. who left the firm and transferred some of his customers to his new company, reports AdvisorHub.

Edward Jones had filed breach of contract and trade secret claims against Michael Peterson, who joined Ameriprise Financial in Nevada in October 2019. But Peterson and Ameriprise filed a counter-claim in the case. They cited what they called unfair competition, a “civil conspiracy” and tortuous interference with business relations.

Last week a three-person FINRA panel rejected the claims put forth by Jones and ordered the firm to pay Peterson $447,000 in damages and $115,000 in attorney fees, along with paying about $200,000 in attorney fees to Ameriprise. No reasoning was provided by the panel for its decision since it was not requested by the parties involved.

One month after Peterson’s departure in 2019, Edward Jones obtained a restraining order from a federal court that temporarily prohibited the broker from contacting his former clients. But Peterson fought the matter in court, denying the company’s claims that he had violated restrictive covenants of his employment or taken trade secrets with him. He said that Jones was attempting to “disrupt his transition to a new firm” and keep his customers from communicating with him.

The restraining order ended as the FINRA arbitration panel took over jurisdiction in the case. Following the arbitration panel’s decision, Edward Jones issued a statement expressing disagreement with the ruling. The firm said it would continue to take whatever action is necessary to protect the information of its clients.

Peterson said he was “thrilled” with the arbitration award, adding that it “sends a clear message that clients have a right to choose who their advisor is without interference.”

Transitioning employment in the financial services industry requires counsel that can evaluate any potential legal implications so you can properly manage risk and focus on transitioning your clients. If ignored, these risks can turn a simple transition into contested litigation with significant consequences. Whether you are moving to a new firm or are looking to form a new firm, the financial services transition attorneys at Lewitas Hyman will work to limit the risks you face during this transitional period. For more information, contact us at (312) 291-4600 or through our online contact form for a free consultation.

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