Founders of Precedent Wealth, a San Antonio RIA providing profit sharing to customersare being sued by the bank that owns their former firm for allegedly stealing confidential information and trade secrets while acting improperly toward illegal customers served at their former firm.
Cadence Bank, which bought Linscomb & Williams in 2012, sued brothers Harold and George Williams for violating the National Trade Secrets Protection Act, the Texas Uniform Trade Secrets Act and their contractual and fiduciary duties when they left the firm in April past after 50 years. Harold Williams founded L&W with Dan Linscomb in 1971 and George Williams joined soon after.
Among the claims outlined in the report, the bank alleges that the Williams brothers neglected to give proper notice before resigning in an effort to “maximize chaos and confusion” and that they contacted customers before and after they left with the help of a file proprietary. containing personal information about 275 customers about their characteristics and preferences — a list the plaintiffs say they improperly possessed and maintained.
Among the charges, the plaintiffs also allege that Williams “misappropriated and has threatened to misappropriate” trade secrets related to portfolio modeling and performance, operations, asset management strategies, data reports and financial information that “are used to provide services and otherwise do business outside of Texas.”
“The Williams brothers were also paid substantial sums of money in exchange for trade secrets and confidential information they developed prior to selling Linscomb to Cadence and while employed in executive roles,” the lawsuit notes.
In a court filing dated March 13, 2024, attorneys describe digital evidence that Williams, along with Harold's son, Grant, began planning their departure before the fall of 2022. They had prepared for a possible lawsuit and met with Dynasty Financial Partners in November. Based on the evidence, the trio seemed to have at least an idea of how many assets would be joining them on “Day One.”
The filing says Cadence has received “at least 80” notices of client transfers signed to Precedent from the bank's RIA, which began operating as Linscomb Wealth in January.
“This illegal conduct has resulted in a loss to Linscomb of over $350 million in AUM to date, all of which, upon information and belief, has been transferred to Precedent,” according to the lawsuit.
Precedent Wealth announced its launch on the Dynasty platform on April 26, 2023, just twelve days after officially stepping down from Linscomb. The firm's founders chose the name Precedent to highlight a profit-sharing, fee-reduction program called WillShare that Harold Williams said he hoped would set a new industry standard.
A Dynasty spokesperson said that neither Dynasty nor the Precedent team would be available for comment on the lawsuit; attempts to reach Cadence for comment were also unsuccessful.