August 2, 2013
Edward Jones didn't like the way that its former registered person Lindsey said goodbye. The firm accused him of breach of contract and unfair competition and came loaded for bear at a FINRA arbitration -- to the tune of a $5 million damage claim. Lindsey, however, wasn't about to sit there and take it.
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2012, Claimant Edward Jones asserted:
- violation of the California Trade Secrets Act;
- breach of contract;
- breach of fiduciary duty; and
- unfair competition
in connection with Respondent John C. Lindsay's resignation from Claimant and the formation of Respondent Lindsey & Lindsey Wealth Management, Inc., which offers securities through Respondent Securities America. Claimant sought injunctive relief, actual and punitive damages up to $5 million; costs, and attorneys' fees. In the Matter of the FINRA Arbitration Between Edward Jones, Claimant, vs. John C. Lindsey; Lindsey & Lindsey Wealth Management, Inc.; and Securities America, Inc., Respondents - AND - John C. Lindsey, Counter-claimant, vs. Edward Jones, Counter-respondent (FINRA Arbitration 12-01695, July 29, 2013).
Respondent Securities America generally denied the allegations and asserted various affirmative defenses.
Respondent John C. Lindsey ("Lindsey") generally denied the allegations, asserted various affirmative defenses, and filed a Counter Claim. Lindsey asserted causes of action against Edward Jones:
- intentional interference with prospective economic advantage;
- negligent interference with prospective economic advantage;
- breach of contract; and
- violation of Business & Professions Code §17200.
The FINRA Arbitration Panel made no determination with respect to Edward Jones' claims against Respondent Lindsey & Lindsey Wealth Management, Inc. because that respondent is not a FINRA member firm and did not voluntarily submit to arbitration.
On July 5, 2013, Edward Jones advised FINRA Dispute Resolution of the dismissal of Respondent Securities America.
The FINRA Arbitration Panel denied Claimant Edward Jones' claims against Respondent Lindsey. Also, the Panel denied Claimant Lindsey's counterclaims.
Bill Singer's Comment
Yeah, I know, not much meat on this bone but I can only report 'em as I find 'em.
The takeaway with this case is that you just have to sort of scratch your head and wonder what goes into the calculation about whether or not to sue. After all, Edward Jones was certainly all fired up over a year ago in May 2012 when it filed this arbitration seeking some $5 million in damages. You gotta figure that Edward Jones was smarting over Respondent Lindsey's resignation and apparent audacity in his alleged efforts to unfairly compete with his former firm.
Perhaps this arbitration was part a game of chicken, part a game of sending a message, and part a game of all the game playing that seems to have taken over more rational aspects of running a business on Wall Street these days. In the end, Edward Jones walks away a cooked chicken with a letter returned to sender. Of course, the parties' lawyers all walked away with more moolah in their pockets and a nice smile.