Empower accuses rival of spying and poaching its financial advisers
On the final day of January, an all-hands assembly was referred to as at Empower Advisory Group, the monetary planning division of the large Greenwood Village-based firm.
9 monetary advisors for Empower’s rich shoppers had unexpectedly resigned en masse 5 days earlier than and the corporate was scrambling to know what all of it meant.
What it didn’t know then however believes now could be that there have been company spies on the assembly.
On March 1, 4 extra monetary advisers resigned abruptly — what Empower referred to as “a second wave” of resignations rigorously designed by a competitor to trigger it “most hurt.”
These allegations of company espionage and shopper poaching are spelled out in a prolonged lawsuit that Empower filed in Denver federal courtroom March 13 towards a baker’s dozen of former advisers and the New York firm they left Empower for: Compound Planning.
“As a substitute of competing for shoppers pretty and actually within the market, Compound chooses to poach staff and shoppers from its opponents, like Empower,” it alleged.
Compound CEO Christian Haigh declined to touch upon these allegations Friday.
The 13 ex-Empower advisors in query, 10 of whom are Coloradans, joined Empower when it purchased Private Capital, a wealth administration agency, for $1 billion in 2020. The 13 advisers’ shoppers had a complete of $5 billion in property underneath Empower’s administration, producing tens of tens of millions of {dollars} in annual income for the corporate, in line with its lawsuit.
So, it had cause to be involved when 9 of them left for Compound on Jan. 26. Their resignation letters, that are connected as displays to the lawsuit, are an identical and inform their stunned bosses to contact a Compound lawyer if they’ve any questions.
When a lawyer for Empower did so, he realized of the Jan. 31 espionage, Empower stated.
“We perceive Empower convened an all-hands assembly with its present and potential advisors,” Compound wrote in a letter Feb. 2 that can be connected to Empower’s lawsuit. That letter threatened to sue Empower for defamation if it bad-talked the 13 advisors.
Then got here the second wave of resignations, which price Empower extra shoppers, it stated. All 13 advisers have satisfied shoppers to maneuver from Empower to Compound, the native firm, it stated. Empower believes this shopper exodus will proceed until a decide places a cease to it.
Empower accuses its ex-employees of breaching non-solicitation contracts, stealing commerce secrets and techniques and conspiring collectively to hurt Empower. It accuses Compound of poaching its staff and shoppers. Empower doesn’t say how a lot cash it believes it’s owed however plans to ask jurors in Denver to award it punitive damages if the case goes to trial.
The 13 monetary advisers that Empower is suing are Nathan Bengali, Willem Bloemsma, Matt Buenafe, Rachel Buffalo, Joseph Devorak IV, Aaron Foster, Shannon Lynch, Kevin Mann, Tyler Morris, Whitney Pappas, Bradley Porter, Beau Simon and Ian Wymore.
Empower’s case towards them and Compound isn’t its solely authorized matter. In December, it sued its landlord for refusing to let it depart a downtown lease — one which it inherited when it acquired Private Capital — early. A trial is ready for November.
Empower’s legal professionals within the Compound case are Adam Weiss and Mark Deming in Polsinelli’s Chicago workplace, together with Michael Greco from Fisher & Phillips in Denver.
Compound’s legal professionals are James Heavey and Michael Ward on the Barton agency in New York.