In the latest development in the ongoing legal fracas between Edelman Financial Engines and Prime Capital Financial, Edelman claimed Prime Capital wasn’t adhering to a court-ordered temporary restraining order barring it from soliciting Edelman advisors and clients.
In the request for an additional TRO, Edelman claimed Prime Capital had “deployed the same playbook” in luring Brendan Kenny, an Edelman planner managing about $319 million in client assets, arguing the court order hadn’t deterred Prime Capital.
“A broader, emergency order restraining Prime Capital from contacting Edelman clients previously serviced by Kenny or accepting the Edelman clients that Kenny serviced is necessary to halt Prime Capital’s latest unlawful conduct,” the motion read.
Edelman’s original suit focused on six planners who left to work for Prime Capital, accusing the latter firm of “a coordinated and concealed scheme to pillage” Edelman’s client relationships.
Edelman claimed that Prime Capital encouraged prospects to remain at Edelman to access client information, then resign on a Friday (often before a long holiday) by mail to an office thousands of miles away. Allegedly, this bought the planner and Prime Capital time to solicit their clients after the letters were mailed but before Edelman learned of the resignations.
Earlier this year, Edelman filed for a restraining order, alleging Prime Capital continued to poach Edelman planners while encouraging them to break their employment contracts. The planners in this case were Joan Greenspon and Amanda Salyer, two former Pennsylvania-based Edelman advisors managing $550 million in assets.
In March, a Delaware federal court judge granted the order, prohibiting the former Edelman advisors from using client information and soliciting Edelman’s clients.
However, the judge denied the portion of the TRO request concerning non-acceptance provisions in the Edelman contracts (in which advisors would not even be allowed to accept prior clients without solicitation). The judge believed the provisions would be “effectively forcing Greenspon and Salyer to start their careers from square one.”
According to SEC records, Kenny is based in Farmington, Conn. and joined Edelman in late 2018. In its motion from last week, Edelman claimed that Kenny signed non-solicitation and trade-secret protection provisions as part of his employment agreement.
In its motion from last week, Edelman claimed that Kenny followed a procedure similar to those in previous Edelman-to-Prime Capital moves.
On Friday, May 8, Kenny allegedly began soliciting Edelman clients via personal email accounts, informing them of his departure from Edelman and providing contact information for Prime Capital.
According to Edelman, at 3:13 pm EST, Kenny’s FINRA database was updated to show a Prime Capital registration, and his profile appeared on Prime Capital’s website shortly afterward.
In its motion, Edelman argued that the non-acceptance portions of the contracts should be mandated, in spite of the court’s previous decision not to do so, claiming that the “factual record developed” through discovery (including the April 23 hearing) made it clear that advisors should follow the non-acceptance clauses.
“Prime Capital has thus shown that it cannot be trusted to respect contractual obligations—or to tell the truth about its efforts to steal Edelman’s clients—and absent enforcement of the non-acceptance provisions, Prime Capital will continue profiting from the very misconduct that gave rise to this action,” the motion read.
Edelman declined to comment for this story. Prime Capital did not respond to requests for comment prior to publication.
