Vanguard Group is suing a former star advisor to its ultra-high-net-worth clients, alleging $4.75 billion in client assets are in jeopardy because he is recruiting former clients in violation of a nonsolicitation agreement.

In addition, the lawsuit argues that Matthew Snipes breached his employment contract by failing to give 60 days notice when he left to form his own firm earlier this year.

Vanguard says in the lawsuit that it has so far identified one client who has transferred assets of $26 million to Snipes's new firm, Topsail Wealth Management in Charlotte, N.C. In addition, Vanguard claimed four other clients with assets of $190 million are considering transferring, and three others whose assets total $310 million have declined to engage with their new assigned advisor.

Prior to leaving Vanguard, Snipes managed $4.75 billion in client assets, the lawsuit said.

Vanguard did not respond to a request for comment on the case by press time.

The Vanguard lawsuit charged Snipes with breach of contract, breach of customer non-solicitation provisions, breach of confidentiality agreements and code of ethics, unjust enrichment, misappropriation of confidential information and trade secrets, and tortious interference with contractual and business relationships, unfair competition and breach of fiduciary duty of loyalty. Vanguard is seeking compensatory, punitive and exemplary damages in an amount to be determined later, in addition to costs and attorneys’ fees.

Snipes, who also did not return a call for comment by press time, began working for Vanguard as a client relationship associate in February 2006, according to BrokerCheck. He became a certified financial planner in 2009, according to the CFP website.

The Vanguard lawsuit alleges that the firm spent 16 years and devoted substantial resources to Snipes’ career development, promoting him to financial planner in 2007, senior financial planner in 2010, senior financial advisor in 2013 and ultimately to Vanguard’s most senior client-facing position, which is the senior advisor to ultra-high-net-worth clients, in 2015.

Over time, the suit said, Snipes’s client list grew in number and value, as the average amount of assets for high-net-worth Vanguard clients was $5 million, but in Snipes’ group it was $15 million. By the time of his departure, he was managing $4.75 billion in assets, which generated $8.075 million in revenue annually for the firm.

“Vanguard conferred benefits upon Snipes, including introducing him to its current and prospective clients and providing him with its confidential information, including its client lists, investment strategies, confidential client information such as revenue information, client preferences, assets under management, nature of investments, investment allocations, and client goals,” the court filing said. “Vanguard conferred these benefits to Snipes for the purpose of his performance of work for Vanguard and not to develop a competing business.”

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