Edelman Financial Engines is suing LPL Financial to force the firm to turn over documents concerning an ex-advisor who left Edelman for LPL in May, suggesting in the filing that LPL is stonewalling while the advisor continues to move clients.
Edelman said in its most recent filing that advisor Scott Butera has taken some 53 clients with him since he set up his own shop under LPL’s banner on May 12. The suit against LPL was filed in U.S. District Court in San Diego. Edelman’s original civil case against Butera was filed in early June in U.S. District Court in Maryland.
Butera is a Bethesda, Md., advisor who had worked at Edelman Financial Engines and its predecessors since 2006. The company was formed from a 2018 merger between Edelman Financial and Financial Engines and is now based in Boston and Palo Alto, Calif.
“Because of [Butera’s] conduct on behalf of Butera Wealth Management and LPL Financial, Edelman has suffered financial loss and harm, including in outflows of assets under management totaling more than $36 million,” Edelman said in the Maryland filing on June 7. Edelman said at the time that Butera had taken 21 client accounts. The most recent disclosure of 53 clients means the assets under management figure has likely risen, though it was not disclosed in the most recent filing.
Edelman said Butera violated his contract and fiduciary duties, as well as Edelman’s trade secrets, when he left to join LPL and hang out his own shingle—his new LPL affiliate is called Butera Wealth Management.
“Upon information and belief, [the] defendant has misappropriated, disclosed, and leveraged Edelman’s trade secrets and proprietary client data in his solicitation, acceptance of business, and performance of service for restricted Edelman clients on behalf of himself and LPL Financial. In light of this conduct, on information and belief, defendant intends to continue to contact, solicit, and accept business from restricted Edelman clients to divert Edelman’s clients to Butera Wealth Management and LPL Financial,” the firm's lawsuit states.
Edelman said that Butera also extended an offer to client service associate Niki Wheeles to join LPL and that Wheeles left Edelman without giving prior notice to Edelman.
Wheeles, when reached by Financial Advisor, said neither she nor Butera would comment.
Edelman wants the court in California to hear its motion to have the documents turned over by tomorrow.
“Edelman is in the middle of an expedited discovery schedule to prepare for a preliminary injunction hearing on July 28, 2022, in the District of Maryland and needs this discovery to effectively prepare for depositions and the hearing. Edelman cannot postpone the preliminary injunction hearing; the defendant in the Maryland action, Butera, is currently engaged in the same misconduct and breach for which Edelman has brought suit, including contacting, soliciting, and accepting business from Edelman clients in direct violation of his contractual obligations.