An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Edward Jones Sought Injunction and Damages from Former Employee Who Joined Morgan Stanley
Written: March 15, 2012

In a Financial Industry Regulatory Authority (“FINRA”) Arbitration Statement of Claim filed in November 2010, Claimant Edward D. Jones & Co asserted the following causes of action against Respondents Morgan Stanley Smith Barney (“MSSB”) and Callahan:

  • breach of contract;
  • violation of the Illinois Trade Secrets Act;
  • violation of the Computer Fraud and Abuse Act;
  • breach of fiduciary duty; and
  • unfair competition.

What prompted that kitchen sink of charges?  It seems that Respondent Callahan resigned from Claimant Edward Jones without notice on October 22, 2010.  And where did this former employee go?  Ah, to a competitor, Respondent MSSB.

Claimant Edward Jones wasn’t tickled by the defection of this one broker.  What appears to have stoked the flames of the former employer’s ire was its belief that before Callahan quit, he misappropriated and misused Claimant’s trade secrets.  Additionally, Claimant alleged that its former employee solicited its customers in an effort to get them to end their relationship with Edward Jones and to transfer their business to Respondent MSSB.

Not content to simply wait around for a FINRA Arbitration Panel to hold hearings and reach a verdict, Claimant sought a temporary injunction against Respondents in court, but around December 15, 2010, FINRA was notified that the motion had been denied – I’m guessing that Respondents had a happier Christmas ten days hence.

As to the measure of Claimant’s fury, keep in mind that it initially sought $5,000,000 in compensatory damages plus punitive damages, costs, and fees. By the time of the hearing, however, the demand for compensatory damages had been reduced to  $177,217.00. In the Matter of the FINRA Arbitration Between Edward D. Jones & Co., LP,Claimant, vs. Morgan Stanley Smith Barney and Jerome Allen Callahan, Respondents (FINRA Arbitration 10-05128, March 12, 2012).

Respondents MSSB and Callahan generally denied the allegations and asserted various affirmative defenses.

DECISION

The FINRA Arbitration Panel denied and dismissed with prejudice Claimant Edward Jones’ claims.

Bill Singer’s Comment

Now, it’s not exactly unheard of for registered persons on Wall Street to quit.  Come to think of it, it’s not exactly unheard of for brokerage firms to go out of business with little, if any, notice to their employees – and, frankly, many brokerage firms have a penchant for mass layoffs with little prior warning.  If you’re unfamiliar with that fact, reach out to the former employees of Bear Stearns or Lehman Brothers, or maybe call up some of the former staff at Bank of America, JP Morgan, Citigroup, or Goldman Sachs.  Well, okay, maybe not Goldman Sachs, that firm’s having a bad enough time in the media today.

To Edward Jones’s credit, it doesn’t have the reputation for layoffs.  To the contrary, it has a reputation for its own unique, somewhat insular corporate culture. Regardless, the firm went hammer and tong after Callahan and, in the end, doesn’t have much to show for it beyond this rebuke by a FINRA Arbitration Panel.


 
[^top^]

Previous Entries
March 6, 2015
A registered representative put on his entrepreneur's hat and came up with what he says is a revolutionary online platform for the dissemination of pr... Read On
March 5, 2015
In the fiery afterglow of a nasty post-employment split, former employees and former employers are apt to do battle over underpaid or unpaid bonuses, ... Read On
March 4, 2015
I frequently criticize FINRA for trying to land the knock-out punch on the industry's small fry when there isn't the same blood-lust displayed with so... Read On
March 3, 2015
A potential graveyard for whistleblower claimants under Dodd Frank is 17 CFR 240.21F-4(b)(4). As set forth in the Rule, officers, directors, trus... Read On
March 3, 2015
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page BrokeAndBroker.com Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS... Read On
March 2, 2015
Few queries get my blood more agitated than those in which a client asks my thoughts about the potential acquisition of a so-called Shell Company as p... Read On
March 2, 2015
An opportunity presents itself for you to get involved in some business deal outside of your broker-dealer.  The way you see it, your role won't ... Read On
February 28, 2015
After Credit Card Expense Suspension, Stockbroker Barred By Liens And JudgmentsIf you were lucky to dodge a regulatory bullet, don't count on your def... Read On
February 27, 2015
If you were lucky to dodge a regulatory bullet, don't count on your deft footwork to bail you out a second time.  In a recent FINRA regulatory se... Read On
BrokeAndBroker.com Job Search


Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration Counterclaim BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se PCAOB Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Countrywide Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Thain Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 Eligibility RRBDlaw Appeal Fowler LPL Johnson Cellphone US Airways JPM Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Rule 3050 Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon CGMI Failure to Supervise Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Deferred Compensation RIA Prison Disclosure NASAA Aguilar FCPA Subway Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital Due Process God HSBC Private Placements Eric Stein Wire Fraud FINOP CCO Audit Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Series 7 Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA Disability MetLife Continuing Education Cheating OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS AML PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Sexist NML Argentina Embezzlement Silver Investor Alert Judgment Bank Fraud Deceased Bill Singer BrokeAndBroker TSSB OHO Mary Jo White Trustee Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Rule 3040 Class Action Beneficiary NYAG Schneiderman 11th Circuit Insurance Gallagher White Self Regulation Short Sale Compromise Website TRO Supervision Vacatur SDNY Rule 12206 BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Confidential Inside Information Reg SP VA Regulation SP Customer Rule 3270 Rule 3240 Annual Compliance Questionnaire OWB 2Cir Stockbrokers Cybercrime Loans Altered Records
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+