Edelman Financial Engines Sues Former Advisor for Poaching Clients

 Commentary  June 09, 2022 at 07:44 AM  Share & Print

 
 

What You Need to Know

  • Edelman Financial contends Butera’s contract barred him from soliciting clients for 15 months after his employment ended.

  • In the nearly one month since Butera resigned, at least 21 client accounts have been transferred to LPL.

Edelman Financial Engines is suing a former advisor, Scott Butera, for poaching clients and breaching his contract after abruptly leaving and joining LPL Financial.

According to the suit, filed Tuesday in the U.S. District Court for the District of Maryland Southern Division, Edelman asserts that Butera misappropriated Edelman’s trade secret, confidential and proprietary information and breached his contract.

Butera, according to the suit, “also agreed that he would not solicit, engage in, perform, divert, or accept any business from Edelman clients he had serviced or solicited on behalf of Edelman for fifteen months after his employment ended.”

In the nearly one month since Butera resigned, “at least 21 client accounts” that Butera formerly serviced at Edelman have transferred their business to Butera Wealth Management and LPL Financial, the suit states.

Butera Wealth Management, based in Bethesda, Maryland, provides advisory services through LPL Financial.

A request for comment from Butera was not received by press time.

After 16 years of employment with Edelman, Butera “suddenly resigned, with no prior notice, on May 12, 2022,” the law suit states.

He “immediately joined LPL Financial, one of Edelman’s largest competitors, and began breaching his contractual obligations, misappropriating Edelman’s trade secret, confidential, and proprietary information, and engaging in other unfair and wrongful conduct,” according to the suit.

The lawsuit also asserts that Butera “persuaded or assisted at least one other Edelman employee, Niki Wheeles, to terminate her employment.”

After Wheeles “abruptly resigned from her role at Edelman — the same day Defendant resigned— she was immediately hired as an employee of Butera Wealth Management and LPL Financial,” the suit states.

Edelman said it was seeking monetary damages and injunctive relief to stop Butera’s “ongoing misconduct.”

Because of Butera’s conduct on behalf of Butera Wealth Management and LPL Financial, Edelman states that it “has suffered financial loss and harm, including in outflows of assets under management totaling more than $36 million.”

Edelman, the suit states, “will imminently suffer further financial loss, reputational harm, and damage to its client relationships and referral sources.”


European Compliance Association

European Compliance Association

-