It was no idle legal threat that Edward Jones made, out of the blue, according to financial advisor Melanie J. Housden, who had built a multimillion-dollar business at the firm in the tiny city of Hamilton, Texas — population 3,000 — over 15 years. To be sure, when Housden went independent a year later, Jones made good on its alleged threat and sued her for $3 million, Housden tells ThinkAdvisor in an interview.

A solo advisor since 2015, she is an affiliate partner of Carson Wealth Management Group, in Hamilton.

The award-winning advisor, 51, managed more than $100 million in assets of 300-400 clients when Jones concluded that she was preparing to leave the firm and threatened to "take aggressive legal action" if she did, Housden says.

About two years before going on her own, Housden had conducted research into opportunities elsewhere when she perceived that Jones "wasn't going to be able to provide the services that I thought my clients needed [or] to take care of me as the advisor," she said in a June 2018 interview with InvestmentNews.

What happened down the line after Jones allegedly made its threat were a few rather strange things, Housden says. Her clients suddenly began receiving phone calls about their accounts from people saying they represented Jones. Later, Housden said, she had frightening, unbidden visits from two Jones advisors.

After the firm brought the complaint against her in 2016, Housden filed a counterclaim plus third-party claims against the two advisors.

Then, two years after she exited, Jones dropped its case; and Housden released her counterclaims. She was not required to pay the firm a penny.

However, according to a Jones spokesperson, "Edward Jones did receive payment from firms Ms. Housden became affiliated with after her employment with Edward Jones. All parties released claims against the others, and there was no admission of wrongdoing or liability by any party."

Both Housden and her attorney, David K. Bissinger, declined to comment on Jones' statement regarding payment to firms with which the advisor subsequently affiliated.

In leaving Jones, Housden joined Pinnacle Financial Group and Carson Wealth Management. Pinnacle partnered with Carson and took on the Carson name in 2018.

All's well that's ended well for Housden, perhaps; but between the time of receiving Jones' alleged threat and the conclusion of the acrimonious case, the brokerage gave her rough treatment that included harassment, invasion of privacy and scaring her clients, the FA says.

ThinkAdvisor recently interviewed Housden, on the phone from Hamilton. For the conversation, she used an iPhone with a wireless Bluetooth phone clip connected to the sound processors of her two cochlear implants, which allow her to hear via electric signals. Housden, who lost her hearing at 14, is profoundly deaf. That, obviously, has never stopped her from reaching myriad challenging goals.

Here are excerpts from the interview:

THINKADVISOR: What prompted you to leave Edward Jones after building a big practice there for a decade and a half?

MELANIE HOUSDEN: It all started with the arbitration case of a client I'd inherited when I took over the Edward Jones office in Hamilton in 2004. They waited six years to file a claim to FINRA. I hadn't sold any of the investments, but I was the advisor in that office when they were liquidated; so the claim was filed against me and Edward Jones. I hadn't done anything wrong.

What happened?

FINRA agreed to have the case expunged from my record, and Edward Jones had to file the expungement. However, by 2014, I found that they still hadn't filed it. So I contacted the legal department. I also spoke with FINRA. In about two weeks, it was removed.

So that was that?

No. I received a call from my area leader who said that the legal department had contacted him saying my trying to clear my record indicated that I was going to leave the firm; and he was calling to tell me that if I was going to leave, Edward Jones would take aggressive legal action against me and get HR involved.

Were you in fact preparing to leave?

No, no. Even if I was looking at other firms, that didn't mean I was going to leave. Why would I leave when I had built a successful multimillion-dollar book of business there? I would have to walk out the door without telling any [of my clients] because of my noncompete contract.

How, then, did you react to what the manager said?

I thought: Wow, they threatened me. Why didn't they just say, "We're sorry we didn't take care of this [expungement] like we should have"?

Did the firm follow up on their threat in any way?

I started getting calls from my clients telling me they were receiving weird calls from someone saying they were from Edward Jones who wanted to talk to them about activity in their accounts. It really alarmed them: They were afraid someone was trying to steal their identity.

Why was Jones calling your clients?

They denied they were calling them. But then more clients phoned me saying they were receiving calls from Edward Jones. The clients told them: "I don't know who you are. I talk to Melanie. I don't talk to you about my account."

Did you try to do anything about this?

I called Edward Jones' fraud department, legal department and my area leader. But no one would give me an answer. Then I sent emails to the firm's general partners, head of HR, head of the legal department and my compliance director asking why the firm threatened me and why they were making calls to my clients trying to scare them. No one responded.

What were your thoughts?

I have a very strong Christian faith, and God started prompting me that it was time to make a change. I knew I needed to find another place to go. Obviously, my trust in Edward Jones had diminished. I hadn't done anything wrong. I had to protect my clients. I was terrified. So I started looking for other opportunities. It was the hardest decision I ever made.

What options did you consider?

I knew I needed independence. At Edward Jones, I was an employee, and I didn't want to have to go through problems as an employee [again].

But you were constrained by your noncompete contract from telling the clients you were leaving. How was that experience?

I felt like I was betraying the trust they had in me. I felt awful that they would feel I had abandoned them. [In 2015] I walked out the door with zero [AUM] in the hope that the clients would come to me in my new office, which I opened the day I left.

How did the clients find you?

I had my picture in the window of my [storefront] office. And in a small town, word of mouth travels fast. People knew me because I'd had an office in Hamilton for years.

Did you retain most of the clients you had at Jones?

At first [the new FA in Jones' Hamilton office] took over all the clients. So I had to totally start over. A large amount of the clients did come [to me], but not all of them. We had to work six days a week, night and day, to meet with those clients and gather their information again [and so on]. But a lot of people never understood what was going on, and I couldn't reach out to them. That's the hardest part for me: I hate that they were thinking I would abandon them.

What happened concerning Edward Jones' threat to you?

They sued me [for soliciting the clients]. In their claim, they stated employee disloyalty, unfair competition and breach of contract. They also said I abruptly and unexpectedly resigned with no notice — yet they had threatened me a year before I left. In my opinion, waiting a year to leave after they threatened me was not abrupt.

How did you cope emotionally with the stress of these events? 

My faith in God gave me the strength. God led the way.

What happened next?

An Edward Jones advisor from a town about 65 miles away came to my new office and introduced himself: "I know you built a successful business, and I'm in the running to take over [your former] Edward Jones office. I want to talk to you about the clients."

What did you say?

I asked him to leave. A little later, he broke into the back door of my office. I was thinking this was probably a way that Edward Jones wanted to scare me. I think it was part of a [concerted effort on their part]. The next day a transitional advisor, who was taking over until they hired the new advisor, came to my office.

Did you respond legally to Jones' FINRA claim against you?

I asserted a counterclaim of tortious interference with prospective economic relations, business disparagement and invasion of privacy, as well as third-party claims against the advisor that broke into my office and the advisor that took over Jones' Hamilton office.

Did anything else out of the ordinary happen after you opened your practice?

One day, I was sitting in a restaurant having lunch, and someone came up to the window and took a picture of me and ran off. Another time, when I walked out the front door of my office one night, a van sped up and a man jumped out and took a picture of me. Then he sped off. That was so shocking.

What transpired with Jones' action against you?

I told my attorney I wanted to get everything done as soon as possible, but I didn't want to settle with Edward Jones: I didn't want to pay them anything because I chose to leave. I did the right thing — I didn't tell the clients, and I didn't solicit them. But Edward Jones sued me.

How did the arbitration turn out?

At the end of April 2017, we went to mediation, and I again told them I didn't want to settle. I'd gone into the bathroom and prayed to God: "If you want me to settle, please give me a sign. I don't want to settle, but I will if you lead me." Then I opened the bible app on my phone that I read every day and saw the scripture about David and Goliath: "Goliath must fall in the battle against your giant." I knew that was my answer.

So what did you do?

On the Friday before the Monday the arbitration was scheduled, my attorney came to an agreement with Edward Jones to release me from the lawsuit — with me paying them nothing — and that would be the end. One of the things I wanted, and got, was the right to speak about this journey and help others — whether clients or advisors — who are struggling with a "giant" in their life to persevere and move on.

What do you think influenced Edward Jones to drop the case against you?

I had about 15 clients on video that testified on my behalf, and many more willing to stand up for me too, saying that they found me — that I didn't solicit them, and they didn't know I was leaving.

How much success did you eventually have gathering assets in your new practice?

I walked out the door of Edward Jones in September of 2015; and within 90 days, I had $60 million in assets under management. Today, with over $100 million, I'm back to where I was.