A team of advisers in Richmond, Va., left Salomon & Ludwin, a registered investment adviser, this week to launch their own RIA, Founders Grove Wealth Partners, with backing from Dynasty Financial Partners. On Tuesday, Salomon & Ludwin filed suit against the four team members and Founders Grove, alleging that they intentionally misappropriated the RIA's trade secrets to solicit their clients and breached their employment agreements.
The lawsuit names Founders Grove and four former S&L employees, including Jeremiah Winters, founder, managing partner and CEO of Founders Grove; Kate Atwood, founder, managing partner and president; Chief Operating Officer Jen Thompson; and Director of Customer Experience Abbey Sorensen. It was filed in the US District Court for the Eastern District of Virginia.
A Dynasty release says the team previously managed $750 million in S&L assets and chose Charles Schwab for custodianship.
Founders Grove declined to comment, and the firm's attorney, Brian Hamburger of the Hamburger Law Firm, said: “Due to the nature of the active litigation, we are unable to comment.”
Founder Grove recently joined the Intermediary Recruiting Protocol, an agreement that allows departing advisors to obtain certain client information and solicit them, regardless of whether they had agreements expressly prohibiting such behavior. According to JS Held, the company that administers the agreement, S&L is a member of the protocol.
S&L, an RIA based in Richmond, Va., was founded in 2009 by Dalal Salomon when she took over her independent practice. Her partner, Dan Ludwin, joined the firm in 2018. The lawsuit alleges that Salomon hired and trained financial advisors and operations professionals to exclusively serve her existing clients and their referrals. The firm now has a team of 12, including four advisors, four operational professionals, one trader and three executives.
The complaint says that in exchange for proprietary information about S&L clients, the firm required four team members to sign employment contracts prohibiting them from disclosing or misusing that information. They were also under two-year non-solicitation agreements.
The lawsuit alleges the four breached a fiduciary duty and those employment agreements by obtaining and soliciting customer information.
S&L also alleges that Thompson, who was responsible for updating and developing S&L's training manuals and transition processes, delayed developing and updating those processes to make it more difficult to respond to their misconduct and hire new staff. young.
“Dissatisfied with their role at the S&L, the former employees began to devise a plan to line their own pockets by intentionally stealing from the S&L's customers and sabotaging its operations,” the claim said. “They have solicited many – potentially hundreds – of S&L clients to pressure them into transferring accounts from S&L to FGWP.”
S&L is seeking injunctive relief against the firm, ordering Founders Grove to disclose and use its trade secrets and proprietary information. The injunction also seeks to prevent them from interfering with the S&L's business dealings and soliciting any of its clients during the restricted period. S&L is seeking damages, disgorgement, attorney's fees and costs, and prejudgment and postjudgment interest.