UBS has filed a lawsuit against an advisor team managing $1.4 billion in assets that recently left to create Loxahatchee Capital with support from Elevation Point. In the suit, filed Monday in the Southern District of Florida, the wirehouse claims the team, which operated as the 440 Group at UBS, violated non-solicitation agreements established under the firm’s Aspiring Legacy Financial Advisor program.
The lawsuit was filed against Managing Partner Andrew Plum, partners Thomas Cullen and Taylor Marsh and Principal Kathleen Burke. UBS is seeking a temporary restraining order and expedited discovery in the case.
The ALFA program is a ‘retire-in-place’ program at UBS in which advisors inherit clients from retiring UBS advisors. Retiring advisors receive payments over five years based on the revenue generated by their accounts. Advisors who inherit the client accounts must sign an agreement stating they will not solicit those clients for a specific period should they leave UBS.
“Virtually all of the UBS clients serviced by Defendants (and holding $1.4 billion in assets at UBS) were subject to the non-solicitation restrictions in ALFA Receiving FA Agreements signed by one or more of the Defendants,” according to UBS’ court filing.
UBS claims the advisors were still under the agreement and that the retiring advisors are entitled to receive payments through 2027 and 2028. The team has already transferred $200 million in client assets, according to the lawsuit.
Elevation Point executives have a different view.
“Loxahatchee Capital is a highly respected team that has operated with integrity and in full alignment with industry standards,” a spokesperson for Elevation Point said in a statement. “Clients deserve the freedom to choose which advisors they wish to work with, and UBS’s actions are limiting that choice.”
In the suit, UBS also claims the team misappropriated confidential client information, printing more than 1,100 pages of client account statements before departing.
The wirehouse also accuses the breakaway team of misrepresenting their experience. The new firm’s website states the advisors have been in the industry since 1992. UBS claims that date refers to one of the retiring advisors from whom the breakaway team inherited the clients through the ALFA program.
“Defendants are apparently not content just to try to take his former clients; they are also taking credit for his experience,” the claim states. “This misrepresentation of their new firm’s experience is not surprising given that clients will necessarily be unfamiliar with the new firm.”
This follows news last week that Merrill Lynch filed suit, accusing Dynasty Financial Partners, Charles Schwab and a host of former advisors of running a “premeditated corporate raid” by luring a large, institutional-focused team out of the wirehouse to form a $129 billion RIA, OpenArc.
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