Prudential Insurance Company and its broker-dealer, Pruco Securities, have gone to federal court against four advisors in Wisconsin who left the firm early this month to affiliate with Ameriprise Financial. The filing says the group have taken with them $30 million in client assets they serviced at Pruco and that another $17 million is in the process of transferring.
Prudential filed suit yesterday against four advisors: Andrew R. LaFontain, Nicholas J. Clemence, Sean M. Delaney and Nathan L. Verbeten. Also going with the group, according to the complaint, were advisors Drew C. Schwarz and Nicolas Miselem. The team abruptly resigned on July 3, the complaint said. The departing professionals are known as the Trident Group and based in Brookfield, Wis.
Prudential claims the defectors have aggressively worked to get Prudential clients to move their accounts to Ameriprise, with efforts that go beyond the acceptable activity of announcing a change in affiliation.
“Since joining Ameriprise, defendants have solicited Prudential clients to transfer their accounts from Prudential to Ameriprise—in violation of their post-separation contractual obligations,” said the complaint, filed U.S. District Court for the Eastern District of Wisconsin. “In connection with their association with Prudential, [the] defendants each entered into an agreement that contains post-separation restrictive covenants prohibiting [them] from soliciting Prudential’s clients for a one-year period after their separation and requiring them to maintain the confidentiality of Prudential’s confidential and proprietary information.”
Prudential said in its complaint that more than 20 clients have told the firm that the ex-advisors called them and followed up with email, trying to entice those clients even if they wanted to stay put. The complaint includes an email sent to a client from LaFontain that supposedly gave the client action steps showing them how to move accounts to Ameriprise.
The complaint also says that the departing advisors gave the clients misleading information to persuade them to leave, including suggestions that Prudential was getting out of the investment business, which Prudential calls “a malicious and completely false statement [made] to induce such clients to transfer their accounts to them at Ameriprise.”
“Indeed, one Prudential client informed Prudential that they were moving their assets to [the defendants] at Ameriprise because they were ‘not excited that Prudential is selling its brokerage business later this year.,” the complaint said. Prudential alleges that another defector told a client that Prudential would only be dealing with life insurance and annuities going forward.
“Unfortunately, it appears that [the] defendants’ improper solicitation efforts have proved successful, as numerous Prudential client households formerly serviced by [them] when they were associated with Prudential, with more than $30 million in client assets under management, already have transferred their accounts to Ameriprise. An additional $17 million in client assets under management is in the process of transferring,” the court filing said.
Prudential said the advisors had access to its confidential and proprietary information, including client personal information and financial data. The firm is alleging breach of fiduciary duty and breach of contract, and is seeking a temporary restraining order and preliminary injunction to stop the advisors from soliciting business from Prudential customers or disclosing proprietary information. In the meantime, the firm is pursuing arbitration for permanent injunctive relief from the Financial Industry Regulatory Authority and its arbitration channel.
When contacted by Financial Advisor, Prudential had no comment on the case beyond the filing.
Ameriprise gave a brief statement: “At Ameriprise, we take great care to help advisors who are attracted to our unique value proposition transition to our firm with integrity, and we believe this case is without merit.”