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Anybody left Edward Jones and been sued for fees?

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Nov 11, 2009 4:54 pm

Kudlow -  Yes, EDJ is such a weak company. Darn A shares.  Yes, EDJ wanted him to fail.  They hired him with the specific agenda of getting him to fail.  They spent firm capital, time, and energy getting him to sign on the dotted line, only to piss it away and do everything in their power to force him to fail.  Even going so far as to pit him against an evil FSD that is getting money on the side from the compliance department for every FA he can figure out a way to force out of the firm.  Kind of like a legal bounty hunter.  They will bend over backwards to keep his 20 accounts that he’s created through his only referral approach to the business.  They’ll severely miss his $10K gross a month not being added to the bottom line.  I think I just felt the trimester bonus drop down a notch.  You’re an idiot. 

  Free - time to go.  Pick up your things, exit the building, and don't look back.  You are obviously WAAAY too smart to be an EDJ drone.  Don't worry about outlining your reasons for leaving to the home office.  They don't care.  Weddle's inbox is littered with letters from former EDJ guys like you who are obviously above it all.    I find it funny that you think that you can't trade stocks here.  I know of quite a few stock traders at Jones who make a very good living doing EXACTLY what you're talking about with your stock business.   I did receive the notice.  What you took as "you can't do what you want to do" I took as your FSD will probably ask you to explain why you are selling a long term investment in a short amount of time.  It's a commission issue, not a money management issue.  Let's say you bought that bond last year with 3 pts in it.  You sell it today and reinvest in another bond at 3 pts.  That's 6% in the last year that your client has paid.  They're not looking at the historic changes in muni bond prices between last Oct and today.  They're looking at the potential conflict of interest.    If you're averaging $3K net, exceeding expectations or not, you don't have any branch profitability.  Period.  Just so you know, Location Margin isn't the same as branch profitability.  I know it looks like it on your P&L, but my guess is until you're grossing around $20K you won't even be breaking even.     I don't know about anyone else, but the phrase "I've got a master's in economics and finance and have taught economics on the collegiate level. I've run two successful businesses since then, and I've managed the portfolio of a family endowment for the last 8 years" scares me.    You clearly don't belong at Jones.  For a variety of reasons.  Good luck with your future ventures.    
Nov 11, 2009 5:13 pm


  I can agree with some of your points.  Some of them are a weakness of the "captive" model, which are the same at all wirehouses.  Try using blogs or your own custom marketing literature at Merrill or MSSB.  It just ain't gonna happen.  What they are doing is not all that bad.  I will agree, the investment model is a handcuff, but not to those that believe in it.  That's why it's generally a mid-market providor, because we can provide much better investments and services than what most of our clients could receive elsewhere.  Clients with $250K don't get much attention at Merrill.  At Jones, that's a decent client.  And the investement philosophy at Jones (if you REALLY follow it) is going to be better than what they would get by being ignored at Merrill for ten years.  I'm not downing Merrill, I'm just using them as an example.  That's also why Jones works so well in rural/suburban areas - because there is less wealth and fewer options.   I think an RIA environment would probably serve you well.  But don't cut off your nose to spite your face.  Jones has not "harmed" you.  If you play by the rules and make money, they leave you alone.  And the whole "Jones wants us to fail" arguments are probably the silliest suggestions about Jones that I continuously hear on these boards.  Jones would love nothing more than for the next 5000 FA's to stay and be successful and allow them to divert so much capital away from training and towards more important things.
Nov 11, 2009 5:24 pm

I can’t believe I am saying this but I side with Spiff…

  Free... You claim to have all this experience but then you choose a platform that doesn't emphasize what you do? Everyone knows what EDJ is. Mutual Funds, Blue Chip Stocks and bonds... They are good at what they do. Having been at EDJ I understand the restrictions but they aren't anywhere close to where you say. Having a blog is an issue where ever you go, same with seminars, it's called compliance, you can't just say, "as a swing trader I have made at least 17% gains every year" you have to show audited proof in order to tell people about it...   Every model has it faults: wire,jones,indy,ria... But I think in this case the fault lies with you. Either you aren't what you claim or your incompetent.
Nov 11, 2009 6:04 pm

Wet Blanket - maybe you can weigh in.  Doesn’t the hedge fund operation have to be set up as a separate RIA (or Zach)? 

  Sorry I missed this.  I'm not even a novice at Hedge Funds, but my understanding is that they exist through loop holes in existing regulations.   They don't have to be, normally, registered as a RIA - but if he is a FINRA member running one, it would be disclosed as an outside business activity - and more than likely not allowed.   But just as RIA's are exempt from The Investment Company Act through Rule 3a-4, Hedge Funds are exempt if they meet the criteria under 3c1 (100 or fewer investors) and 3c7(qualified purchasers).   Additionally, they get their shares to market through Reg D filings.   This is my understanding of the regulatory structure of your typical hedge fund.   One of our PMs used to run a Hedge Fund, I'll ask him next time I see him.
Nov 11, 2009 6:30 pm

[quote=Spaceman Spiff]

...  I did receive the notice.  What you took as "you can't do what you want to do" I took as your FSD will probably ask you to explain why you are selling a long term investment in a short amount of time.  It's a commission issue, not a money management issue.  Let's say you bought that bond last year with 3 pts in it.  You sell it today and reinvest in another bond at 3 pts. ... [/quote]   And if you don't invest it into another bond? If you just sell it to take the gains; sell it to take advantage of movements in the marketplace; sell it because you can reposition the bonds into, say a newly available, better, similar investment like taxable munis?   I wholeheartedly disagree with your take on this. In my mind it is a money management issue; because EJ only sees a buy-and-hold strategy as the only possible outcome of any purchase. Some of these assets have gained nearly all their potential upside in a significantly short time period. Holding onto them ignores the TVM, and taking away my commission penalizes me for no good reason.   Of course, other than immunizing the company from any future lawsuits at an expense to no one but me.
Nov 11, 2009 7:29 pm

Lock, that’s not true.  I have gone over this with my FSD.  He made it clear to me, they did not need a switch letter, and were not going to question the trade (or if they did, just an explanation of the profit taken would be sufficient to document it).  They did say that it is because of FINRA’s limitations on commissions that can be charged within given time frames.  Basically, they said commissions cannot be charged in relationship to the value of the profit made.  This is not specific to Jones - it is industry-wide.

Nov 11, 2009 8:35 pm
Mia culpa.   My FSD did ask for switch letters. Then again, he also instructed me to never make a recommendation on a self-directed retirement. I could only present options (minimum: two) and let the client decide without bias on my part.    
Nov 11, 2009 8:44 pm

Compliance isn’t an exact science.  I contradict myself on occasion (but usually due to new developments / information) - that’s the nature of the beast.

Nov 11, 2009 9:02 pm

I look at Compliance kind of like a football referee.  He knows the rules, the players know the rules, but at some point he has to make a call that is questionable.  Best he can do is trust his eyes and his gut.  Not everyone agrees with him all the time, but for the most part everyone knows he's there to make sure guys don't get hurt. 

Nov 11, 2009 9:25 pm


Mia culpa.   My FSD did ask for switch letters. Then again, he also instructed me to never make a recommendation on a self-directed retirement. I could only present options (minimum: two) and let the client decide without bias on my part.    [/quote]   In your defense, I have heard that some FSD's are stricter than others.  When I asked my FSD WTF this "two options" thing was for IRA's, he sort of bit his lip and read me the Compliance requirement.  He asked me to explain my process, and after I did he said "you're fine.  So you're basically explaining to them that they could do this or that, RIGHT?"  He said the firm (and others) are getting pressure from the SEC (or IRS or FINRA or NAFTA or whoever) on the the Pension Protection Act requirements.  All that stuff has been in place for decades, but for some reason they are starting to come down on it.   As far as switch letters, I get asked for them occassionally, but usually for good reason.  But most of my "switching" is within fund companies, so no commissions.  Not sure how it would go with active trading.  I would suggest a conversation with your FSD.  I know of some guys that do active trading, but their FSD is OK with it because they have explained their process to them (and they are not pompous d!cks to their FSD ).
Nov 11, 2009 11:45 pm

Rants aside, to answer your questions: yes, they will go after you. After 17 months of employment at EJ, my guess is that they will sue you for around $50,000.

Fear not, though. All you really need is a good attorney experienced in these matters. I know someone who left EJ, was sued for about $70K, and settled on $1,500 (+ $1,000 in legal fees).

Nov 12, 2009 12:57 am

Tell EJ to kis* your as*.  What a weak company.  They wanted you to fail so they could take over your accounts and make more in the long run.  They have the by far the weakest advisors in the business.  You’ve done your clients a great service.  Find a way to sue EJ if you lose pay it back it’s that simple.  You did right thing.  If you lose tell investors how much of a scam A shares pushed by EJ is.

  Kudlow that is one of the dumbest things I have ever seen posted on this site. And I left Jones. STFU.
Nov 12, 2009 5:36 am

LOL, just trying to get a rise out of you.  By the way how are those American Funds A shares doing for you?  I guess when the opportunity comes around you can buy or sell options and maybe buy a stock less than $5.  Ooops maybe not. 

Sep 3, 2010 11:39 am

If you want to get out now, without worrying about paying money, go straight to RIA and don't affiliate with a BD.  EJ's contract hasn't been updated yet to exit in that's their current "exit" loophole.  Use it before they fix it.

From what lawyers have told me, it is different industry/career practice and thus is unenforceable.  Has held up in court in several states, so a legal precedent has been somewhat set already.  Get an attorney, review it, and move on.  Writing a check to your lawyer will be cheaper than writing a check to EJ.

Sep 3, 2010 1:14 pm

You people really need to look at the dates of these posts.  This conversation is almost a year old. 

The only reason it popped up again is because the moderator's software can't catch the real spammers. 

Sep 9, 2010 1:51 pm

I am also looking to leave Jones, no hard feelings, it is just time to make some money.  I do not feel it is helping them or me by staying.  I am looking to hear from people who have left.  What was your attorney able to negotiate?  I do not want to leave with hard feelings for a place I worked at.  It is great for some people, just not everyone.  Once you blow thru your savings, it is time to move on. 

Is it reasonable to expect an attorney to get you down to $1000 or so, plus fees?