Jones Ordered to Pay Ex-Broker in Dispute over Account Openings
(Corrects third paragraph to reflect that Flynn worked at five firms over 13 years, not seven firms over 11 years. Two firms listed on his BrokerCheck record were acquired by JPMorgan.)
A former California broker dismissed by Edward Jones for allegedly opening a spate of accounts to qualify for a bonus has won more than $150,000 and expungement of defamatory comments from his regulatory records in an arbitration decision alerting firms to the need to precisely spell out account-funding policies.
Jones discharged Ryan Sean Flynn in February 2016 after determining that “the majority of accounts” he had opened the previous November in order to meet “certain performance milestones and receive additional compensation” remained unfunded as the date of his termination, according to his BrokerCheck record.
“There was no written policy or procedure that required accounts to be funded within any specific time period,” a three-person Financial Industry Regulatory Authority Panel ruled on June 30, adding that the customers “knowingly and willingly” opened the accounts. Flynn, who had worked at five different firms over his 13 years as a broker at the time of his dismissal, violated no investment-related, statute, regulation, rule or industry standard of conduct, despite Jones’ affirmation of a violation on its Form U5 central registration depository dismissal forms, the arbitrators wrote.
In addition to ordering Jones to remove the defamatory language from Flynn’s regulatory record (while permitting it to keep “discharged” as the reason for his termination), the arbitrators ordered Jones to pay the former broker $82,540 in compensatory damages, which was 68% of the $120,000 he had requested, along with his entire $67,460 legal bill and $5,000 of punitive damages for violating a California labor law.
A Jones spokesman did not respond to a request for comment on the decision or on the firm’s account-opening policies and incentives. A lawyer representing Flynn, who worked out of a Jones office in Ladera Ranch, Calif., and is not currently registered as a broker, did not return a call for comment.
Arbitration decisions do not have precedential value in other cases, under SEC-approved Finra rules, and are highly fact-determinant, lawyers said.