Ameriprise and Broker Ordered to Pay Edward Jones Nearly $4.8 Million in Trade Secrets Dispute
From the desk of Jim Eccleston at Eccleston Law
Ameriprise Financial and broker Cory J. Clem must pay Edward D. Jones & Co. nearly $4.8 million following a Financial Industry Regulatory Authority (FINRA) arbitration dispute over allegations that Clem improperly used confidential client information before leaving Edward Jones.
According to AdvisorHub, a FINRA arbitration panel ordered Clem to pay Edward Jones more than $2.7 million in damages and costs. Ameriprise must pay $375,000 in punitive damages, and the panel held Ameriprise and Clem jointly liable for more than $1.6 million in additional damages and fees.
Edward Jones alleged that Clem and Ameriprise conspired between October 2022 and January 2023 to misappropriate confidential trade secret information and solicit clients while Clem still worked at Edward Jones.
Ameriprise and Clem denied the allegations. Ameriprise counterclaimed that Edward Jones used the case to intimidate former advisors and competitors and to interfere with longstanding client relationships. Clem separately asserted claims for tortious interference, defamation and conspiracy
The panel denied both counterclaims. It also denied Edward Jones' request for a permanent injunction that would have required Ameriprise and Clem to return client information and barred them from further contacting or soliciting clients.
According to AdvisorHub, the award reverses an earlier court victory for Clem. In 2023, Edward Jones sought a temporary restraining order that would have prevented him from contacting or soliciting former clients.
Edward Jones alleged in that case 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. According to AdvisorHub, Clem argued that he did not use the information after his departure and instead relied on publicly available information to announce his move.
A federal judge declined to grant the temporary restraining order after finding that Edward Jones had not shown Clem misused client information. According to a source at the time, the court also appeared to credit customers' interest in learning where their advisor had moved.
The FINRA panel did not explain the basis for its decision, which is customary unless both sides request a reasoned award.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, trade secrets, securities arbitration, broker dispute, ameriprise financial, edward jones
