SAN JOSE, Calif.–First Tech FCU, whose representatives are registered with Raymond James, has filed suit against LPL Financial, Osaic and several former employees for a “deliberate misappropriation of trade secrets,” arguing the advisors leaving the firm took privileged information about all their members.
The suit was filed in Idaho federal court and claims Idaho residents (and registered reps) Alfred “Jack” Jackson and Kristina Hernandez resigned in September without notice to join LPL, while Sage Kendall quit at the same time to move to Osaic, according to WealthManagement.com.
First Tech, which is now undergoing a merger with Massachusetts-based Digital Credit Union, offers advisory services through Raymond James’ Financial Institutions Division and Financial Services Advisors. According to SEC records cited by WealthManagement.com, Jackson registered in the industry with Raymond James in 2006, Hernandez in 2024, and Kendall with numerous firms since 2006, before registering with Raymond James in 2012.
‘Conspired for Months’
According to First Tech’s complaint, “the trio conspired for months between themselves (and their soon-to-be employers) before resigning on Sept. 9. Jackson and Hernandez joined LPL via Jackson’s newly formed company Riverside, while Kendall affiliated with Osaic and the firm Family Tree,” WealthManagement.com reported.
The report added that First Tech is alleging that on the night before their resignation, the representatives were seen copying “stacks of documents,” and claimed Jackson’s logins to a company portal (including client information) jumped from zero early in the year to 13 to 19 times per month in the stretch leading up to his departure, WealthManagement.com stated.
Additional Allegations
In addition, WealthManagement.com said the complaint further alleges the departing reps claimed they were protected by the Protocol of Broker Recruiting, established in the early 2000s to curb a rise in intra-broker/dealer lawsuits over departing advisors soliciting former clients after joining new firms. The protocol allows (but limits) resigning reps to take limited client information, the report noted, adding that while LPL and Osaic are signatories to the protocol, First Tech argues that it has never signed the protocol, a fact that it alleges is well known to its financial advisors.
“Given their intimate familiarity with the Protocol—coupled with the public nature of who is a Protocol member—it is unquestionable that both LPL and Osaic knew that First Tech was not a Broker Protocol member—yet each knowingly allowed their new hires to take and use a complete customer list anyway,” the complaint reads, WealthManagement.com said.
$520 Million in Business Allegedly Taken
Additionally, while First Tech reps register with Raymond James (which is a Protocol signatory), First Tech argued that this doesn’t impact its case, and that while Raymond James’ Financial Institutions Division “may be able to waive its own rights, it lacks the authority to waive the rights of others,” the report added.
WealthManagement.com said that according to First Tech, the assets from the complete client list that the defendants took totaled approximately $520 million. The firm estimates that it has already lost over $205 million in assets and more than $1.1 million in recurring annual revenue due to client transfers, the complaint alleges.
