Ameriprise, advisor on the hook to pay Edward Jones $4.7 million in trade secrets lawsuit

Edward Jones this week prevailed in a three-year old lawsuit against Ameriprise Financial and a former Jones advisor in which Edward Jones alleged violations of trade secrets, winning more than $4.7 million in damages and costs. 

A three-person arbitration panel under the aegis of FINRA Dispute Resolution Services on Tuesday approved the sizeable award to Edward Jones, which in 2023 sued Ameriprise and a former advisor, Cory Clem, claiming “misappropriation” of trade secrets, according to the award.

Edward Jones alleged the stealing of valuable client information, when the advisor left to start working for Ameriprise in January 2023 in an office in Macomb, Ill.

In a constant fight over control of clients, the financial advice industry has a long history of such allegations and disputes. When advisors leave one firm for another, broker-dealers and RIAs may use the courts or private arbitration to fight over the retention of client information.

According to his BrokerCheck profile, Clem worked at Edward Jones from 2010 to 2023. A spokesperson for Edward Jones on Thursday did not return a call to comment.

A spokesperson for Ameriprise wrote in an email: “We disagree with the outcome of this matter. We remain focused on supporting advisor transitions in a manner consistent with industry standards and obligations while providing an exceptional client experience."

The three arbitrators did not give any insight or reasoning to their decision, which is typical in FINRA arbitrations.

Edward Jones’ lawsuit stems from allegations that “between approximately October 2022 and January 2023, while still an employee of [Edward Jones,] Clem – working in concert with Ameriprise – attempted to misappropriate trade secret information, solicit clients, encourage employees to leave and join Ameriprise, and open a competing business in the same town as the branch Clem was operating,” according to the award.

According to the award, Ameriprise and Clem together are liable to pay Edward Jones $1.65 million in compensatory damages and legal fees.

Meanwhile, separately, Ameriprise is liable to pay Edward Jones $375,000 in punitive damages; Clem is liable to pay more than $2.7 million in compensatory damages, punitive damages and attorneys’ fees.

Claims of advisors’ stealing trade secrets are often difficult to win in court or arbitration.

For example a federal judge in Kansas this June dismissed Edelman Financial Engines’ trade secrets lawsuit against Mariner. Edelman had alleged that Mariner had stolen advisors and clients.