LOUISVILLE, Ky.–For the second time in a one-week period, there was legal action involving a credit union and former financial advisors who left the CU and joined independent broker-dealer Osaic Wealth and who allegedly took members with them.
In this case, the financial advisors were with Ameriprise Financial and were working inside Park Federal Credit Union. The financial advisors have now agreed not to solicit some former customers and to return confidential client information as part of a lawsuit settlement, according to Advisor Hub.
Ameriprise and Park FCU sued Arthur S. Grossbard, a 43-year industry veteran in Jupiter, Fla., and Dylan Pfeffer, a 12-year veteran in West Orange, N.J., on Aug. 19, the report stated. The firms accused the two of trying to transfer client assets in violation of one-year non-solicitation agreements in their franchisee contracts and of failing to return team-issued laptops, according to Advisor Hub.
No Admission of Wrongdoing
The report says the two brokers, who joined Osaic in July with a 20-advisor team managing $1.5 billion in assets and generating $9 million in revenue, did not admit wrongdoing in the agreement. The case now moves to arbitration, where Ameriprise is seeking a permanent injunction and damages. The order allows Grossbard and his team to solicit clients they served before joining Ameriprise in 2020, the report states.
“Although the Defendants do not acknowledge any wrongdoing, the Plaintiffs and Defendants operate in a highly regulated industry where protection of client confidential information is important and required by law,” Judge Rebecca Grady Jennings wrote in approving the agreement. “There is a strong public interest in protecting client confidential information and ensuring that contractual obligations are followed.”
Spokespersons for Ameriprise and Osaic declined to comment, and Park Federal did not immediately respond to a request for comment, according to AdvisorHub.
Second Case in a Week
As the CU Daily reported earlier, California-based Logix Federal Credit Union sued Osaic and two advisors, John S. Janios and Anthony J. Martinez, accusing them of conspiring to steal trade secrets and client information after leaving to start their own practice in Valencia, Calif.
Ameriprise has also filed several cases against brokers who moved to LPL Financial, in what recruiters say is a broader test of client ownership for independent contractors, according to Advisor Hub.
