Our colleague Janene Marasciullo, a Member of the Firm at Epstein Becker Green, has a November 2019 post on the Trade Secrets & Employee Mobility blog that will be of interest to many of our readers in the financial services industry: “Enforcing Non-Solicitation Agreements Against Financial Professionals: A Court Finds Financial Professionals Have a Duty to Notify Clients About a Change of Employment.”
Following is an excerpt:
A recent decision in Edward D. Jones & Co., LP v. John Kerr (S.D.In. 19-cv-03810 Nov. 14, 2019), illustrates the unique challenges that broker-dealers may face when enforcing post-employment covenants that prohibit former registered representatives (“RRs”) from soliciting clients. Edward Jones sued Kerr, a former RR, to enforce an employment contract that required him to return confidential information upon termination and prohibited him from “directly or indirectly” soliciting any Edward Jones’ client for a period of one year. Although Kerr did not challenge the validity of the confidentiality and non-solicitation provisions, the court denied Edward Jones’ request for a temporary restraining order (“TRO”) because it found that RRs who change firms have a duty to notify clients of material changes to their accounts, which includes changes of employment. The Kerr opinion provides a useful primer for financial firms seeking to enforce post-employment restrictive covenants. …
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The Workforce Bulletin blog is currently edited by Scott J. Connolly, Adam S. Forman, Greta Ravitsky, Elizabeth S. Torkelsen, and Jennifer Stefanick Barna.