Edj legal action and protocol
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I am curious what EDJ does to an FA who leaves to go Indie? I spoke with an attorney who painted a rough picture. Anyone leave and experience either a 15% T12 settlement or choose to go to arbitration?
according to the attorney it does not matter. Anyone can “sue” or file a TRO, or accuse of stealing company proptery ie. names and addresses, and presto you end up in court or end up writing a check. I am just curious how many FA’s have had some type of legal action against them after leaving Jones. As many know they are not part of protocol, as far as what the contract says it was signed well over 10 years ago during simpler times, so I have no copy nor any idea what I signed in my youth. I wanted to go Indie until today’s conversation with attorney in which I was advised to hold back 15% of t12 to cover costs.
[quote=madedjrep]according to the attorney it does not matter. Anyone can “sue” or file a TRO, or accuse of stealing company proptery ie. names and addresses, and presto you end up in court or end up writing a check. I am just curious how many FA’s have had some type of legal action against them after leaving Jones. As many know they are not part of protocol, as far as what the contract says it was signed well over 10 years ago during simpler times, so I have no copy nor any idea what I signed in my youth. I wanted to go Indie until today’s conversation with attorney in which I was advised to hold back 15% of t12 to cover costs. [/quote]
Your youth? Were you a minor when you signed the contract?
Kind of hard to get better legal advice if your attorney cannot even review your employment contract. No one’s fault but your own.
Your youth? I thought the Jones contract was for 3 years. Am I missing something?
In the state that I live they consider names and phone numbers property of the firm. Even if I take them out in my head I can still be accused of taking trade secrets. The intent of my quesiton is to figure out how aggressive EDJ has been in going after FA’s after they leave. Obviously they have a choice.
Your youth? I thought the Jones contract was for 3 years. Am I missing something?
************************************************************************from what my atorney says the 3 years is going after training costs. I am concerned about walking out with names and what EDJ will do.
[quote=madedjrep]In the state that I live they consider names and phone numbers property of the firm. Even if I take them out in my head I can still be accused of taking trade secrets. The intent of my quesiton is to figure out how aggressive EDJ has been in going after FA’s after they leave. Obviously they have a choice. [/quote]
Are you talking with an attorney who has specific prior experience/expertise in this industry? Based on your comments here it doesn’t sound like it. Either that or you haven’t completely understood what he would have told you.
For example, I am not an attorney but no state considers publicly available information like names, addresses and phone numbers to “belong” to a firm. (If something is, by definition, publicly available, how can any firm “own” it? If anyone owns it, it would be the individual clients involved.) However, each firm is required by Regulation S-P (Privacy of Consumer Information) to safeguard all client information, and to not disclose nonpublic personal information. It is largely for this reason that Protocol firms are able to agree to let departing FAs take publicly available information about clients; otherwise they would be in breach of Reg S-P.
There is much more nuance to it than that, but my point is that either your attorney has no experience in this, or you misunderstood him on this point. And if there is clearly misinformation on a basic point, who knows what else might be wrong as well.
You are wise to seek legal counsel on this, especially since you have no copy of your employment agreement, but be certain you are dealing with an attorney who has experience in helping brokers exit from broker/dealers. Otherwise you won’t receive any meaningful value for your effort.
[quote=exEJIR]How long have you been with EDJ?[/quote] He said 10 years. And I think he said he was 6 when he signed it.
It’s changing, but the old Jones culture came from Ted Jones where he stated that no one should be there unless they wanted to be there. Of course, later the 3 year contract came into being, but Aggressive is not what I would call them. Could be wrong though.
[quote=madedjrep] Your youth? I thought the Jones contract was for 3 years. Am I missing something?
************************************************************************from what my atorney says the 3 years is going after training costs. I am concerned about walking out with names and what EDJ will do.[/quote]
I think standard protocol is to send letter stating that you are under a non-compete for a year (bascially reiterates what your contract states).
If they have no way if knowing that you took client info, they can’t do anything to you. However, if you start sending in pre-filled ACAT’s, that will send up a red-flag. And if they start finding out you are directly contacting former clients, that can get you in trouble. Just be careful. And if you’re a small producer (like under 25mm in AUM), you likely won’t be on their radar.
But this is just my opinion.
If you have a larger book, which at 10 yrs I hope is the case, within an hour of you giving notification they will have a team from home office on the phone with your clients. Chances are they will seek a TRO also. That is why most producers give notification lake on a Friday afternoon, so the legal team hopefully isn't able to put the TRO into place until the following Monday morning. That way you get the weekend to call your clients personally to let them know that you have moved on. You can't solicite them moving due to your non-compete, but you can let them know where and why you moved. It is a very fine line.If you are going indy talk to your support team, they have gone through this numerous times. Don't go and print all of your client lists, because that will raise a red flag, and we all know that big brother has the capability of viewing that type of info. Use an old AUM list as your contact list. If you don't mind me asking, what was the proverbial straw that broke the camels back? Good luck to you!
I left Jones almost two years ago to go indy–was at Jones 14 years–they were quite nasty and they put a whole team on my clients to keep them from trying to transfer. However, they only sent out letters to me with the threats–but never any action. I did go by the rules and didn’t directly contact my former clients—I did ads in the paper–I did send out the tomstone letter, and since it is a small town–I made myself very visable in the stores, community events and I ate out more than ever in the town. Of course I would run into clients and they would ask questions and set up appointments. In the end I took only 50% of my target book. But much much more happier as an indy. The funny thing was I never had any ill will at Jones–but I did after there were so nasty after departure.The straw that broke my back at Jones--after doing one very successful Goodknight plan and recruiting 17 new brokers and mentoring...my regional leader ask me to do another Goodknight plan...I told him based on the conditions of the community at the time that I thought it wouldn't be in my best interest! He even took my BOA out to lunch several times to get her to convince me to do another Goodknight. When partnership came out--the amount offered to me had gone down 80% from the three previous times and my BOA's increased 300%. I called and had a meeting with my regional leader and ask what the hell is up with this---he said I had mistaken that I should have realized that doing another Goodknight is voluntary---but not really!!!!!!!!! I spent the next 6 months planning my escape! Good luck--the one thing I can say positive about being indy compared to Jones---think of managed futures--Jones doesn't do them and I have some very happy clients. Think of non traded REITs--Jones doesn't do them and I have some very happy clients. You need to have a checklist of things to do to get ready to leave Jones. Treat leaving Jones like a military objective. Gather intel--plan--recheck your plan--get yourself set up with space, files, desks, computers, phone lines, ect...., there is just so much to do to get ready to go.
I have worked with EDJ for over 10 years. I started right out school and was happy to have a job. I did not keep copies of docs that I signed. I consulted with a attorney who specializes in the industry. His name was given to me from RayJa. He knew the names of all the Jones legal dept. I have built a nice business with over 100mm AUM. After looking at all the platforms from UBS, SB, MS, RJF, and discussions with LPL. I realize I have a pretty basic platform and sure could use other ways of developing my fee based business. I am pretty nervous about loosing clients and either being forced to write a big check or end up in a long drawn out legal battle. I spoke with 4 EDJ FA’s who have left. 2 had their new BD write checks for 10% of t12, the other had a legal battle for 2 years and the last would not talk. If I go indie obviouly I am paying for everything.
Roadhard, curious why you think only 50% came over. Was it 50% of what you wanted or 50% of total book. I have about 700 households but only want about 250 of those. I started from scratch. Have you heard of any other experience with EDJ FA’s leaving? thanks
My 50% was the targeted book! Not the whole book. The reason is that Jones placed a 16 year vet in my former office–gave them ad money to work with–then sent out 5 letters over a 6 week period to each client warning them that I have left and that I might have compromised their privacy! Nice! I had some clients call me and said things like I can’t believe you would have taken off with my personal information. Jones lawyers sent me a total of 12 letters over a year timeframe claiming that I violated rules. It wasn’t until I sent them a personal letter telling them to ---- or get off the pot! I never heard another word from them. When I left I had 87 million AUM. Like I said I thought I left on good terms, I never violated the rules, ect…, but my biggest complaint was the way they treat you when you leave. By the way madedjrep I also started from scratch–so I know where you are comming from.
Roadhard, you have been a big help, I am wrestling with RayJay and MS. One way I have probably alot of happiness and a true independent office but with all the liability and the other way a massive check and a 9 year commitment.
The biggest slap in my face was that they did not allow me to block file for my partnership K-1 like ever other limited partner. I had to file in everystate that had an income tax. Petty, Petty, Petty. IndyEDJ
but my biggest complaint was the way they treat you when you leave. By the way madedjrep I also started from scratch–so I know where you are comming from.
I was one of three advisors that left EJ a year ago to go independent. We all left on the same day. Together we had 35 years combined experience at EJ. The three of us all had very different experience leaving.Personally I did not have any issues when I left Edward Jones. Be smart about how you leave and you should not have problems. We were advised to send an announcement postcard and follow up with clients on the phone. Additionally, if I were you, I would not leave messages on answering machines. Also, be careful about taking any files from the office. I have heard from others, EJ does not like it when it appears you have taken files. They will come after you for that. Regarding the other two, EJ went after one for sending out transfer packets to all his former clients. One client took the packet into the old EJ office and the next thing he knew, EJ files an arbitration claim and also files a lawsuit in district court. Ultimately he settled out of court and could not contact clients for six months after the settlement. Do not blanket send transfer paperwork to all clients. Only send the paperwork once someone tells you they are going to transfer. Again, be smart about it. Now the last person that left is an interesting story. This person told some clients that he was leaving and it made it back to EJ. Next thing he knew, EJ opens a compliance investigation and they are looking at everything. The basis for the investigation is that he was using descretion on accounts (they were not using descretion, EJ just made it up to mess with them). Ultimately this investigation gave EJ the ability to hold up his U5 for 30 days. When the U5 came back it stated he was involuntarily terminated. This person then had to send narratives to all states he was licensed in and also needed to complete a FINRA investigation. It enede up being a paperwork nightmare, but in the end it did work out. I would also mention this person never had a complaint or investigation the 15 years they were at EJ. Ultimately our team transferred 70 percent of assets in the first month, and looking back a year later, we transferred about 85 to 90 percent of our assets. If you built the business and you believe your clients will transfer, they will. Also we are now producing more than when we were at EJ. Also talk to your new compliance person. They are the ones on the front line dealing with EJ. Ironically after the fact, my compliance person tells me that EJ is one of the worst firms to deal with. EJ can and will be very nasty when you leave. Hope this helps. If anyone needs further advice, contact me.