Local wealth advisory ‘blindsided,’ sues ex-employees who left to launch new firm

salomon ludwin Cropped

Salomon & Ludwin is headquartered at 1401 Gaskins Road in the West End.

The resignation of four employees from a local wealth advisory who left without warning to launch their own firm has led to a lawsuit and a judge ordering them to temporarily stop soliciting their former employer’s clients.

Salomon & Ludwin, a West End-based advisory that manages $1.7 billion in client assets, last month sued former employees Jeremiah Winters, Kate Atwood, Jen Thompson and Abbey Sorensen for allegedly stealing trade secrets and wrongfully soliciting clients upon starting their new firm, Founders Grove Wealth Partners.

The case was filed in federal court in Richmond on May 28, four days after the foursome resigned without notice as Memorial Day weekend began.

The defendants, the lawsuit claims, immediately announced their new firm and began messaging clients about the move that same day as their departure.

The suit claims the foursome have solicited “potentially hundreds” of S&L’s clients in violation of their employment agreements. S&L claims those contracts included non-solicitation clauses and provisions that supersede the “Broker Protocol,” a set of industry standards that guide financial advisors when jumping from one firm to another.

S&L’s court filings and a press release disseminated by the firm says it has been and continues to be harmed by the exodus, which took four of its 12 employees. Winters and Atwood were two of the firm’s four advisors. Thompson and Sorenson were two of its four operations employees.

The firm claims its clients were confused by the mass departure and concerned about its ability to continue to serve them given the loss.

“As each minute passes, Plaintiff Salomon & Ludwin…suffers a loss and harm to the value of its client relationships, reputation and goodwill, and proprietary information,” the company stated in court filings.

The lawsuit alleges violations of the federal Defend Trade Secrets Act, as well as the Virginia Uniform Trade Secrets Act and breach of duty of loyalty for the defendants’ forming their new firm while still employed at S&L.

S&L asked the court for damages in an amount to be determined at a jury trial. It also asked the court to issue an injunction to stop the former employees from further disclosing trade secrets and soliciting its clients.

In at least a temporary victory for S&L, presiding U.S. District Court Judge Henry Hudson last week entered an order temporarily prohibiting Founders Grove from further soliciting S&L clients until the court enters a formal opinion on whether a more extensive restraining order should be imposed.

“S&L is grateful that the Court recognized the gravity of this situation for our business and ruled in our favor to halt what we believe are unlawful actions,” the firm said in a press release.

It’s unclear how many S&L clients have followed the group to Founders Grove. Atwood and Winters previously managed $750 million in client assets at S&L, according to a press release announcing Founders Grove’s launch.

foundersgrovevideostill

A still of a video announcing the launch of Founders Grove Wealth Partners featuring (from left) Jen Thompson, Kate Atwood, Jeremiah Winters and Abbey Sorensen.

In a video announcing their new firm on its website, the Founders Grove foursome declare “effective immediately we are no longer affiliated with Salomon & Ludwin.”

The new firm has set up shop at 6802 Paragon Place in Henrico and has been supported in its launch by Dynasty Financial Partners, which reportedly backs newly formed investment advisory firms financially in exchange for a minority ownership stake, according to reports from industry trade publications.

In their argument against a temporary restraining order and for dismissal of the case, the defendants claim they are protected by the “Protocol of Broker Recruiting.”

They claim they took only client information that is allowed by that protocol and claim they did not discuss their departure from S&L with clients until after they had formally resigned.

“Plaintiff’s allegations are barren of any evidence to the contrary because there is none,” the defendants argue in court filings. “The Protocol is a complete bar to the allegations in this case, which are nothing more than S&L’s effort to avoid its own obligations as a Member Firm of the Protocol.”

The defendants further argue that their employment agreements with S&L do not supersede the protocol.

“Having voluntarily joined the Protocol, S&L has agreed to this fluid nature of the industry, the portability of this select client information, and, of course, clients’ freedom to choose with whom they entrust with their financial wellbeing,” the defendants state in their responses.

S&L was founded in 2009 by namesakes Dalal Salomon and Daniel Ludwin after years as part of Wells Fargo Advisors.

Headquartered off Gaskins Road in the West End of Henrico, the firm says it manages the assets of families, entrepreneurs, doctors and executives.

The firm says it hired the four defendants between 2009 and 2017. It claims none of the four had their own clients when they joined the firm and relied on existing clients and internal referrals for their new clients since then.

S&L claims it paid for the foursome’s professional training and continuing education over the years, in addition to generous compensation. It claims Winters, who is now managing partner and CEO of Founders Grove, was paid approximately $650,000 a year in compensation and benefits while at S&L. The others were paid more than $250,000, the firm states in court records.

“Not content with S&L’s investments and generosity, the former employees plotted a scheme to line their pockets and harm S&L,” it alleges.

salomonandludwin

S&L cofounders Dalal Salomon (left) and Dan Ludwin.

S&L’s press release included quotes from both its namesakes.

“We are shocked and deeply saddened that part of our close-knit team chose to leave our firm in this manner,” Ludwin said in the prepared statement. “For over a decade, we’ve celebrated weddings, birthdays, weekend trips, and daily lunches together. It’s like losing part of your family.”

“I feel blindsided,” Salomon said in the release. “For 40 years, we’ve run our business with integrity and compassion for our clients and team. It breaks my heart that the firm and reputation we’ve tirelessly built is being questioned due to the way these team members chose to part ways.”

Founders Grove declined to comment when reached by phone this week. A representative referred calls to the firm’s attorneys, who did not respond by press time.

Also included in the court record are copies of the resignation letters the defendants submitted to S&L on the day of their departure. Some of the letters list explanations for the resignations, including criticisms of S&L management, concerns over the promotion of Salomon’s son at the firm, the handling of an SEC audit several years ago and an alleged $1 million trading error.

S&L’s attorneys addressed the contents of those letters in a prepared statement shared with BizSense.

“Salomon & Ludwin remains disheartened that its former employees have attempted to distract from their wrongdoings by attempting to damage the firm’s reputation with their public filing of their resignation letters that have nothing to do with the employees’ unlawful conduct and include statements that our client vehemently refutes,” the law firm states.

“Our client will not back down and will continue to fight to protect its clients and decades of hard work.”

S&L is represented in the case by a group of attorneys from Washington, D.C. law firm Sheppard Mullin, including Denise Giraudo and Paul Werner.

The defendants and Founders Grove are represented by Richmond attorney Henry Willett of Christian & Barton, as well as New York attorney Sharron Ash of the Hamburger Law Firm.

salomon ludwin Cropped

Salomon & Ludwin is headquartered at 1401 Gaskins Road in the West End.

The resignation of four employees from a local wealth advisory who left without warning to launch their own firm has led to a lawsuit and a judge ordering them to temporarily stop soliciting their former employer’s clients.

Salomon & Ludwin, a West End-based advisory that manages $1.7 billion in client assets, last month sued former employees Jeremiah Winters, Kate Atwood, Jen Thompson and Abbey Sorensen for allegedly stealing trade secrets and wrongfully soliciting clients upon starting their new firm, Founders Grove Wealth Partners.

The case was filed in federal court in Richmond on May 28, four days after the foursome resigned without notice as Memorial Day weekend began.

The defendants, the lawsuit claims, immediately announced their new firm and began messaging clients about the move that same day as their departure.

The suit claims the foursome have solicited “potentially hundreds” of S&L’s clients in violation of their employment agreements. S&L claims those contracts included non-solicitation clauses and provisions that supersede the “Broker Protocol,” a set of industry standards that guide financial advisors when jumping from one firm to another.

S&L’s court filings and a press release disseminated by the firm says it has been and continues to be harmed by the exodus, which took four of its 12 employees. Winters and Atwood were two of the firm’s four advisors. Thompson and Sorenson were two of its four operations employees.

The firm claims its clients were confused by the mass departure and concerned about its ability to continue to serve them given the loss.

“As each minute passes, Plaintiff Salomon & Ludwin…suffers a loss and harm to the value of its client relationships, reputation and goodwill, and proprietary information,” the company stated in court filings.

The lawsuit alleges violations of the federal Defend Trade Secrets Act, as well as the Virginia Uniform Trade Secrets Act and breach of duty of loyalty for the defendants’ forming their new firm while still employed at S&L.

S&L asked the court for damages in an amount to be determined at a jury trial. It also asked the court to issue an injunction to stop the former employees from further disclosing trade secrets and soliciting its clients.

In at least a temporary victory for S&L, presiding U.S. District Court Judge Henry Hudson last week entered an order temporarily prohibiting Founders Grove from further soliciting S&L clients until the court enters a formal opinion on whether a more extensive restraining order should be imposed.

“S&L is grateful that the Court recognized the gravity of this situation for our business and ruled in our favor to halt what we believe are unlawful actions,” the firm said in a press release.

It’s unclear how many S&L clients have followed the group to Founders Grove. Atwood and Winters previously managed $750 million in client assets at S&L, according to a press release announcing Founders Grove’s launch.

foundersgrovevideostill

A still of a video announcing the launch of Founders Grove Wealth Partners featuring (from left) Jen Thompson, Kate Atwood, Jeremiah Winters and Abbey Sorensen.

In a video announcing their new firm on its website, the Founders Grove foursome declare “effective immediately we are no longer affiliated with Salomon & Ludwin.”

The new firm has set up shop at 6802 Paragon Place in Henrico and has been supported in its launch by Dynasty Financial Partners, which reportedly backs newly formed investment advisory firms financially in exchange for a minority ownership stake, according to reports from industry trade publications.

In their argument against a temporary restraining order and for dismissal of the case, the defendants claim they are protected by the “Protocol of Broker Recruiting.”

They claim they took only client information that is allowed by that protocol and claim they did not discuss their departure from S&L with clients until after they had formally resigned.

“Plaintiff’s allegations are barren of any evidence to the contrary because there is none,” the defendants argue in court filings. “The Protocol is a complete bar to the allegations in this case, which are nothing more than S&L’s effort to avoid its own obligations as a Member Firm of the Protocol.”

The defendants further argue that their employment agreements with S&L do not supersede the protocol.

“Having voluntarily joined the Protocol, S&L has agreed to this fluid nature of the industry, the portability of this select client information, and, of course, clients’ freedom to choose with whom they entrust with their financial wellbeing,” the defendants state in their responses.

S&L was founded in 2009 by namesakes Dalal Salomon and Daniel Ludwin after years as part of Wells Fargo Advisors.

Headquartered off Gaskins Road in the West End of Henrico, the firm says it manages the assets of families, entrepreneurs, doctors and executives.

The firm says it hired the four defendants between 2009 and 2017. It claims none of the four had their own clients when they joined the firm and relied on existing clients and internal referrals for their new clients since then.

S&L claims it paid for the foursome’s professional training and continuing education over the years, in addition to generous compensation. It claims Winters, who is now managing partner and CEO of Founders Grove, was paid approximately $650,000 a year in compensation and benefits while at S&L. The others were paid more than $250,000, the firm states in court records.

“Not content with S&L’s investments and generosity, the former employees plotted a scheme to line their pockets and harm S&L,” it alleges.

salomonandludwin

S&L cofounders Dalal Salomon (left) and Dan Ludwin.

S&L’s press release included quotes from both its namesakes.

“We are shocked and deeply saddened that part of our close-knit team chose to leave our firm in this manner,” Ludwin said in the prepared statement. “For over a decade, we’ve celebrated weddings, birthdays, weekend trips, and daily lunches together. It’s like losing part of your family.”

“I feel blindsided,” Salomon said in the release. “For 40 years, we’ve run our business with integrity and compassion for our clients and team. It breaks my heart that the firm and reputation we’ve tirelessly built is being questioned due to the way these team members chose to part ways.”

Founders Grove declined to comment when reached by phone this week. A representative referred calls to the firm’s attorneys, who did not respond by press time.

Also included in the court record are copies of the resignation letters the defendants submitted to S&L on the day of their departure. Some of the letters list explanations for the resignations, including criticisms of S&L management, concerns over the promotion of Salomon’s son at the firm, the handling of an SEC audit several years ago and an alleged $1 million trading error.

S&L’s attorneys addressed the contents of those letters in a prepared statement shared with BizSense.

“Salomon & Ludwin remains disheartened that its former employees have attempted to distract from their wrongdoings by attempting to damage the firm’s reputation with their public filing of their resignation letters that have nothing to do with the employees’ unlawful conduct and include statements that our client vehemently refutes,” the law firm states.

“Our client will not back down and will continue to fight to protect its clients and decades of hard work.”

S&L is represented in the case by a group of attorneys from Washington, D.C. law firm Sheppard Mullin, including Denise Giraudo and Paul Werner.

The defendants and Founders Grove are represented by Richmond attorney Henry Willett of Christian & Barton, as well as New York attorney Sharron Ash of the Hamburger Law Firm.

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Dana Bensinger
Dana Bensinger
27 days ago

As a longstanding and contented client of S&L, I find it imperative to express my profound dismay regarding a recent occurrence which, in my experience, stands as a glaring testament to the abandonment of fundamental business ethics. While I respect an individual’s prerogative to establish their own firm, the way this particular situation unfolded appeared to me, tailored to inflict maximum disruption and harm, devoid of any consideration for the welfare of clients. The events transpired on a Friday afternoon preceding a holiday weekend, ostensibly rooted in internal disputes within the firm, thereby profoundly unsettling my trust and confidence in… Read more »

Shelton Fraher
Shelton Fraher
26 days ago
Reply to  Dana Bensinger

It appears from grievances listed in the article that concern for the clients was the impetuous behind the departure. And the response from S&L indicates to me their leadership’s unwillingness to acknowledge or take responsibility for their actions. When confronted, it seems they’re more eager to take shots at their former employees’ character than admit wrongdoing or past mistakes.

Dana Bensinger
Dana Bensinger
26 days ago
Reply to  Shelton Fraher

Sheldon, Thank you for your reply. I am aware that there were likely issues on both sides, and sometimes parting ways is the best resolution. However, my concern lies with how the situation was handled. I received a text message on Friday afternoon of a holiday weekend informing me of their departure, along with a link to a professionally produced video of the new firm and their office space, and information on how to easily transfer my accounts to their firm. Throughout the holiday weekend, I received several calls and messages. The urgency and execution made me question if there… Read more »

Sheryl Griffin
Sheryl Griffin
26 days ago
Reply to  Dana Bensinger

That is not how it works. Financial advisors almost always leave on Friday and it most certainly remains confidential until the minute of departure. It has been like that for many many years.

Brian King
Brian King
14 days ago
Reply to  Dana Bensinger

I was surprised when I received Dan Ludwin’s email. 370 million and 447 clients later they should be just fine