An Ohio advisor has accused the partners at her Cleveland RIA firm of lying about profits and loss figures in their negotiations to sell the firm to a high-profile acquirer.
Wendy Eldridge, a former managing director at Marcum Wealth, also claims her partners discriminated against her because she is a woman, and is suing two of her firm’s partners for first withholding financial information from her and then later for freezing her out of the industry with a non-compete agreement after she’d stopped working at the firm. She still officially holds ownership units at the firm and now says she can't leave or work.
One of her accusations is that the firm’s principals stretched the truth about its profit and loss figures as they pondered selling it to Hightower, the giant Chicago-based serial acquirer. The talks never led to a deal.
“As the company was preparing and presenting financial information for the Hightower purchase, [chief executive officer Eric Wulff] removed substantial revenue from plaintiff P&L and allocated thousands of dollars in expenses for the purpose of artificially enhancing the remaining Marcum Wealth P&L before presenting it to the potential purchaser as part of the buyer's due diligence.”
Marcum has $2.2 billion in assets under management, according to its Form ADV, and about $1.7 billion of that is belongs to wealthy clients and families. The firm was forged by a merger in 2020 between Marcum Wealth, a unit of New York accounting firm Marcum LLP, and Aurum Wealth, a Cleveland firm founded in 2006.
Besides Marcum and Wulff, Eldridge also named Skoda Minotti Holdings, the largest holder of membership units in Marcum Wealth, in the suit, as well as managing directors Christopher Bart and Steven Brett.
Eldridge said she was admitted as a “Class B” partner in 2017 to Aurum and that she was responsible for all aspects of Marcum Wealth’s retirement plan practice.
She claims that as a member she was entitled to quarterly reports about the firm’s finances and that Wulff in particular withheld that information from her after she asked for it multiple times in 2022 and 2023; she said that contrary to Wulff’s claims that the numbers weren’t ready or available, the firm furnished this information to third parties.
“For over 14 months, Wulff failed to provide Plaintiff with any detail of any kind regarding her P&L,” the complaint said. According to Eldridge, Wulff said he “unilaterally” determined what revenue would come to her group and how its expenses were assessed. At one point she said $100,000 in employee expenses were added to her unit and that it affected her compensation, though she deemed it unfair. Wulff’s response to these challenges was “I decide” or “I determined that it’s fair.” He also withheld financial information about new partners that were added and how the new ownership percentages were calculated, Eldridge claims.
In early March of last year, she was told that 80% of the retirement plan revenue from Marcum’s Philadelphia practice for 2022 would go on her P&L statement since she was responsible for serving the practice, though the expenses, benefits and salaries of all the individuals serving that business would also go onto the P&L statement. Later that same day, she was told the revenue figure was being shrunk from 80% to 20%, but the expenses stayed the same, and she says this substantially cut her compensation for 2022.
“Wulff told the plaintiff that all partners took a cut. This was not true,” Eldridge claims.
This adds up to what Eldridge said was “systemic shareholder oppression,” and that it related to her being female. She said she was the only woman among 12 members and was discriminated against when it came to compensation, where she claims there was no formula for equity. Her share of the company was about 2%, according to court documents. She asked about buying new shares, but was rebuffed. She said she was later subject to misogyny, harassment and verbal attacks, both in person and at a Zoom meeting. She withdrew from the firm last year, but the parties failed to sell her ownership units to another party, so she’s technically still a member of the firm, yet unable to work because of her non-compete agreement.
This makes her “unable to find gainful employment while subject to an indefinite non-competition restriction,” she said in the lawsuit.
According to her LinkedIn page, Eldridge has been with Marcum since March 2014 and that she left in April of last year. The lawsuit against Marcum, Wulff and the holding company was filed in January.
Eldridge is suing for “past and future economic and non-economic compensatory damages, back pay, front pay, punitive damages, attorneys' fees, costs, interest, and any other equitable relief.”
Wulff and Bart did not return calls seeking comment, nor did an attorney for Eldridge or representatives for Hightower.