Salomon & Ludwin is headquartered at 1401 Gaskins Road in the West End.
Salomon & Ludwin scored yet another incremental victory in its lawsuit against a group of its former employees who abruptly resigned to launch their own firm.
The Henrico-based investment advisory last week won an injunction that will temporarily continue to prevent Jeremiah Winters, Kate Atwood, Jen Thompson, Abbey Sorensen and their new company Founders Grove Wealth Partners from further poaching S&L clients.
The ruling from Judge Henry Hudson is an extension of a previous temporary restraining order that similarly sought to stop the Founders Grove foursome from soliciting S&L clients. This latest injunction extends that prohibition until a final judgment is reached in the case.
The order, however, does not prevent Founders Grove from servicing any clients that have already come over from S&L, nor does it prevent additional clients from moving their accounts to Founders Grove of their own volition.
The defendants, who had worked for S&L for years, abruptly resigned on Memorial Day weekend and immediately announced the launch of Founders Grove.
They’ve since lured more than 400 S&L client accounts to Founders Grove, amounting to more than $352 million in client assets, according to court records.
S&L had $1.7 billion in client assets under management prior to the defendants’ departure.
S&L promptly sued 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.
A still of a video announcing the launch of Founders Grove Wealth Partners.
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 defendants claim the protocol takes precedent over those employment contracts. They also argue that the protocol was designed to permit this sort of advisor and client movement 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.
However, Judge Hudson’s injunction order shows he continues to wrestle with whether the defendants’ departure from S&L constituted “raiding,” for which the broker protocol provides an exception that would counteract their defense.
Hudson noted that the protocol does not define the term “raiding,” nor has it been addressed in other courts. Both sides have sought to define the term throughout the case, both through court filings and testimony at a recent hearing.
S&L cites an article written by a financial advisory that defines raiding as when “a recruiting firm takes a large volume of advisors and staff members all at once… and transcends into damaging the prior firm itself.”
Another article cited in the case states that a raiding claim most show that a “’severe economic impact’ resulted and that the alleged raider’s behavior involved ‘malice/predation’ and/or ‘improper means.’”
It also cites an explanation that states that a “severe economic impact exists when ‘the alleged improper hiring involves at least 40 percent of the business unit’s production.’”
The defendants’ defection to Founders Grove marked the exit of 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.
While Hudson notes that the defendants have argued that raiding doesn’t apply because they left to form their own form, rather than being hired by an existing competing firm, he found that argument doesn’t hold up.
“The court finds that the combination of the number of employees that left and the amount of clients lost constitute a several economic impact to Plaintiff,” Hudson said in his 16-page opinion. “It also appears the Defendants acted with predation.
Hudson ultimately stated that the protocol’s raiding exemption likely applies in this case.
Hudson also found that S&L, should the case proceed, has a good chance to succeed in its trade secrets claims.
“Plaintiff has adequately shown that defendants took confidential information and used it after their employment ended,” Hudson wrote.
S&L cofounder Dalal Salomon, in a prepared statement last week, said the firm views the judge’s ruling as a victory.
S&L cofounders Dalal Salomon (left) and Dan Ludwin.
“Salomon & Ludwin is very pleased the Court, after hearing extensive evidence and arguments, entered a Preliminary Injunction to stop the brazen and unlawful raid perpetrated by four departing colleagues to harm the company by taking advantage of its goodwill for their own pecuniary gain,” Salomon said in the emailed statement. “We will continue to fight for what is right and our focus will continue to be on servicing our clients and the greater Richmond community.”
S&L was founded in 2009 by Salomon and Daniel Ludwin after they had spent years as part of Wells Fargo Advisors.
S&L is represented in the case by a group of attorneys from Washington, D.C. law firm Sheppard Mullin, led by Denise Giraudo.
The Founders Grove defendants are represented by Richmond attorney Henry Willett of Christian & Barton, as well as New York attorney Sharron Ash of the Hamburger Law Firm.
Willett declined to comment when reached last week.
The Founders Grove defendants have the ability to appeal the injunction and also have argued to have the case moved out of federal court and into Henrico Circuit Court, the latter of which the judge has yet to address.
The defendants had yet to file an appeal of the injunction as of press time.
Salomon & Ludwin is headquartered at 1401 Gaskins Road in the West End.
Salomon & Ludwin scored yet another incremental victory in its lawsuit against a group of its former employees who abruptly resigned to launch their own firm.
The Henrico-based investment advisory last week won an injunction that will temporarily continue to prevent Jeremiah Winters, Kate Atwood, Jen Thompson, Abbey Sorensen and their new company Founders Grove Wealth Partners from further poaching S&L clients.
The ruling from Judge Henry Hudson is an extension of a previous temporary restraining order that similarly sought to stop the Founders Grove foursome from soliciting S&L clients. This latest injunction extends that prohibition until a final judgment is reached in the case.
The order, however, does not prevent Founders Grove from servicing any clients that have already come over from S&L, nor does it prevent additional clients from moving their accounts to Founders Grove of their own volition.
The defendants, who had worked for S&L for years, abruptly resigned on Memorial Day weekend and immediately announced the launch of Founders Grove.
They’ve since lured more than 400 S&L client accounts to Founders Grove, amounting to more than $352 million in client assets, according to court records.
S&L had $1.7 billion in client assets under management prior to the defendants’ departure.
S&L promptly sued 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.
A still of a video announcing the launch of Founders Grove Wealth Partners.
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 defendants claim the protocol takes precedent over those employment contracts. They also argue that the protocol was designed to permit this sort of advisor and client movement 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.
However, Judge Hudson’s injunction order shows he continues to wrestle with whether the defendants’ departure from S&L constituted “raiding,” for which the broker protocol provides an exception that would counteract their defense.
Hudson noted that the protocol does not define the term “raiding,” nor has it been addressed in other courts. Both sides have sought to define the term throughout the case, both through court filings and testimony at a recent hearing.
S&L cites an article written by a financial advisory that defines raiding as when “a recruiting firm takes a large volume of advisors and staff members all at once… and transcends into damaging the prior firm itself.”
Another article cited in the case states that a raiding claim most show that a “’severe economic impact’ resulted and that the alleged raider’s behavior involved ‘malice/predation’ and/or ‘improper means.’”
It also cites an explanation that states that a “severe economic impact exists when ‘the alleged improper hiring involves at least 40 percent of the business unit’s production.’”
The defendants’ defection to Founders Grove marked the exit of 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.
While Hudson notes that the defendants have argued that raiding doesn’t apply because they left to form their own form, rather than being hired by an existing competing firm, he found that argument doesn’t hold up.
“The court finds that the combination of the number of employees that left and the amount of clients lost constitute a several economic impact to Plaintiff,” Hudson said in his 16-page opinion. “It also appears the Defendants acted with predation.
Hudson ultimately stated that the protocol’s raiding exemption likely applies in this case.
Hudson also found that S&L, should the case proceed, has a good chance to succeed in its trade secrets claims.
“Plaintiff has adequately shown that defendants took confidential information and used it after their employment ended,” Hudson wrote.
S&L cofounder Dalal Salomon, in a prepared statement last week, said the firm views the judge’s ruling as a victory.
S&L cofounders Dalal Salomon (left) and Dan Ludwin.
“Salomon & Ludwin is very pleased the Court, after hearing extensive evidence and arguments, entered a Preliminary Injunction to stop the brazen and unlawful raid perpetrated by four departing colleagues to harm the company by taking advantage of its goodwill for their own pecuniary gain,” Salomon said in the emailed statement. “We will continue to fight for what is right and our focus will continue to be on servicing our clients and the greater Richmond community.”
S&L was founded in 2009 by Salomon and Daniel Ludwin after they had spent years as part of Wells Fargo Advisors.
S&L is represented in the case by a group of attorneys from Washington, D.C. law firm Sheppard Mullin, led by Denise Giraudo.
The Founders Grove defendants are represented by Richmond attorney Henry Willett of Christian & Barton, as well as New York attorney Sharron Ash of the Hamburger Law Firm.
Willett declined to comment when reached last week.
The Founders Grove defendants have the ability to appeal the injunction and also have argued to have the case moved out of federal court and into Henrico Circuit Court, the latter of which the judge has yet to address.
The defendants had yet to file an appeal of the injunction as of press time.
It’s hard to relate. Sounds like a bunch of rich people fighting over other rich peoples money. But it does make me curious as to how many “boutique” wealth management firms there are in Richmond alone. And what do they really do? S&L manages over a billion! I’m assuming there are many others at that level. Down the rabbit hole I go….
Coming out of my rabbit hole:
I found this site called expertise.com. They list the top 15 wealth management firms in Richmond. Neither of the above mentioned firms are on it though. Which now leads me to the question: If S&L has over a billion under management, what are the top 15 doing? Back down the rabbit hole.
Here’s a link if anyone is interested:
https://www.expertise.com/finance/financial-advisors/virginia/richmond
Is it easy to demonstrate a client left under their own volition? I would think a new service provider could say, “I’m not allowed to solicit you, but….” and then the client can tell the prior firm they are leaving under their own volition.