Judge OKs new order to stop ex-Salomon & Ludwin employees from poaching clients

salomon ludwin Cropped

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

Local investment advisor Salomon & Ludwin last week notched an initial, albeit temporary victory in its legal battle against a group of its former employees who abruptly resigned to launch their own firm.

S&L’s request for a temporary restraining order to stop Jeremiah Winters, Kate Atwood, Jen Thompson, Abbey Sorensen and their new company Founders Grove Wealth Partners from further poaching S&L clients was approved by U.S. District Court Judge Henry Hudson on June 20.

The order prohibits the defendants from disclosing or using any of S&L’s trade secrets or proprietary information or from further soliciting any of its clients for the time being.

Hudson’s ruling, however, does not prevent the defendants from servicing any former S&L clients that had already moved their accounts to Founders Grove since the group abruptly resigned from S&L on Memorial Day weekend.

Court records illustrate the hit S&L has taken since the mass exodus began. On June 5, the date the parties made their first appearance in court, a total of 333 clients had transferred a total of $280 million in assets from S&L to Founders Grove. That number had grown to 427 accounts and $352 million as of June 18.

Headquartered in the West End, S&L had $1.7 billion in client assets under management prior to the defendants’ departure.

foundersgrovevideostill

A still of a video announcing the launch of Founders Grove Wealth Partners.

In addition to siphoning off clients and their funds, the move also took four of S&L’s 12 employees. Winters and Atwood were two of the firm’s four advisors. Thompson and Sorenson were two of its four operations employees.

S&L is suing the group for allegedly stealing trade secrets and wrongfully soliciting clients upon starting Founders Grove without notice to their longtime employer.

The case was filed in federal court in Richmond on May 28, four days after the foursome resigned.

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.

The restraining order approved last week extends Judge Hudson’s previous “standstill” order and kicks off a process by which both sides will further argue for and against a more long-term restraining order that could stretch the entirety of the case.

Atwood and Winters previously managed $750 million in client assets at S&L, according to a press release announcing Founders Grove’s launch.

salomonandludwin

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

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

The firm says it hired the four defendants between 2009 and 2017, and emphasized in court filings that 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.

The crux of the Founders Grove group’s defense hinges on the so-called “Broker Protocol,” a set of industry standards that guide financial advisors when jumping from one firm to another.

S&L claims the foursome had entered into employment contracts that included non-solicitation clauses that supersede the protocol.

The Founders Grove foursome claims the protocol takes precedent over those employment contracts. They also argue that the protocol was designed to permit this sort of occurrence and that they followed the provisions of the protocol with each step they took upon leaving S&L.

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.

Founders Grove is backed by Dynasty Financial Partners, which reportedly supports newly formed investment advisory firms financially in exchange for a minority ownership stake.

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.

Local investment advisor Salomon & Ludwin last week notched an initial, albeit temporary victory in its legal battle against a group of its former employees who abruptly resigned to launch their own firm.

S&L’s request for a temporary restraining order to stop Jeremiah Winters, Kate Atwood, Jen Thompson, Abbey Sorensen and their new company Founders Grove Wealth Partners from further poaching S&L clients was approved by U.S. District Court Judge Henry Hudson on June 20.

The order prohibits the defendants from disclosing or using any of S&L’s trade secrets or proprietary information or from further soliciting any of its clients for the time being.

Hudson’s ruling, however, does not prevent the defendants from servicing any former S&L clients that had already moved their accounts to Founders Grove since the group abruptly resigned from S&L on Memorial Day weekend.

Court records illustrate the hit S&L has taken since the mass exodus began. On June 5, the date the parties made their first appearance in court, a total of 333 clients had transferred a total of $280 million in assets from S&L to Founders Grove. That number had grown to 427 accounts and $352 million as of June 18.

Headquartered in the West End, S&L had $1.7 billion in client assets under management prior to the defendants’ departure.

foundersgrovevideostill

A still of a video announcing the launch of Founders Grove Wealth Partners.

In addition to siphoning off clients and their funds, the move also took four of S&L’s 12 employees. Winters and Atwood were two of the firm’s four advisors. Thompson and Sorenson were two of its four operations employees.

S&L is suing the group for allegedly stealing trade secrets and wrongfully soliciting clients upon starting Founders Grove without notice to their longtime employer.

The case was filed in federal court in Richmond on May 28, four days after the foursome resigned.

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.

The restraining order approved last week extends Judge Hudson’s previous “standstill” order and kicks off a process by which both sides will further argue for and against a more long-term restraining order that could stretch the entirety of the case.

Atwood and Winters previously managed $750 million in client assets at S&L, according to a press release announcing Founders Grove’s launch.

salomonandludwin

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

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

The firm says it hired the four defendants between 2009 and 2017, and emphasized in court filings that 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.

The crux of the Founders Grove group’s defense hinges on the so-called “Broker Protocol,” a set of industry standards that guide financial advisors when jumping from one firm to another.

S&L claims the foursome had entered into employment contracts that included non-solicitation clauses that supersede the protocol.

The Founders Grove foursome claims the protocol takes precedent over those employment contracts. They also argue that the protocol was designed to permit this sort of occurrence and that they followed the provisions of the protocol with each step they took upon leaving S&L.

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.

Founders Grove is backed by Dynasty Financial Partners, which reportedly supports newly formed investment advisory firms financially in exchange for a minority ownership stake.

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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Ed Harrol
Ed Harrol
17 days ago

How can this hold up in court when the FTC banned Non-Competes earlier this year?

William Willis
William Willis
17 days ago
Reply to  Ed Harrol

Just a question as I don’t know myself: but a non-compete would prevent them from entering in the same industry and that is not what the lawsuit is stating. The law suite is poaching, which is not covered by a non compete but anti poaching laws. So they can be in the same industry but can’t go after clients gained by their work at Salomon & Ludwin. Are those not two different policies and laws or are they combined as the same? Just interested in clarification.

Daniel Cooper
Daniel Cooper
17 days ago

Because NDAs were not banned.

Brian King
Brian King
17 days ago

We’ll never know exactly why a $650,000 Advisor and 3 – $250,000 employees left. Is the work environment that heinous at S&L? Then again a 1% cut each quarter funds ambition.