UBS sues team that broke away with help from Elevation Point

Not quite two weeks after a group of advisors left UBS to start a breakaway firm with the help of Elevation Point, the wirehouse is suing them for soliciting clients inherited from retired colleagues.

UBS filed suit in federal court in West Palm Beach, Florida, on Monday against four advisors who departed on Sept. 19 to form Loxahatchee Capital in Tequesta, Florida. The advisors named in the suit — Andrew Plum, Thomas Cullen, Kathleen Burke and Taylor Marsh — had been part of a prominent family office practice that has operated at UBS for more than a decade as the 440 Group. 

The four advisors had managed roughly $1.4 billion in assets and produced $9 million in revenue in the year before their departure, UBS said in the filing — and it has already received requests to transfer about $200 million in client assets to Loxahatchee Capital.

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“Upon information and belief, Defendants have received a highly lucrative transition deal from Elevation Point pursuant to which they will be eligible to receive substantial incentive compensation based on the amount of UBS client assets they are able to move to out of UBS,” the suit alleges.

Elevation Point, which is not named as a defendant in the suit, is an RIA “accelerator” that provides various types of support to breakaway teams.  It announced last week that it had taken a minority stake in Loxahatchee Capital. “Loxahatchee Capital is a highly respected team that has operated with integrity and in full alignment with industry standards,” 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.” 

Under ALFA program, retired advisors still getting income from ex-clients

UBS alleges that the defendants had inherited most of their clients through its Aspiring Legacy Financial Advisor, or ALFA, program, which provides retiring advisors with a means of passing their books of business down to younger colleagues. According to the suit, advisors who signed up to take on clients through the ALFA program agreed to various nonsolicitation provisions barring them from trying to move those accounts over to other firms.

The length of the nonsolicitation periods was tied directly to the fact that many of the retired advisors who had sold their books of business through the ALFA program were entitled to receive revenue from their passed-down clients for another five years. For instance, one of the defendants, Plum, signed an ALFA deal in 2019 prohibiting him from trying to move his inherited clients until Nov. 30, 2025. The suit says Plum placed a call on the day his team left to one of the retired advisors whose clients he had taken on to apologize for his plan to move the accounts with him.

The ‘secret project’

“Plum further told the [retired advisor] that this ‘secret project’ has been in the works for 8 months and that the new firm opened a new building for them,” according to UBS.

UBS said the breakaway advisors acquired most of their clients through ALFA agreements signed in 2019, 2022 and 2023.

“That means the [retired advisors] were still receiving payments under the 2022 and 2023 ALFA agreements at the time of Defendants’ resignation and were entitled to continue receiving payments through 2027 and 2028 under the 5-year payment period of those agreements,” according to the suit. “In short, any breach by Defendants of the non-solicitation covenants in their ALFA Receiving FA Agreements would injure not just UBS but also their former teammates, the Legacy FAs.”

The suit further alleges that each of the defendant advisors signed a team agreement in August 2024 barring them from soliciting clients for a year after leaving. UBS declined to comment on the suit. Loxahatchee Capital did not immediately return a request for comment.

Printing out documents, immediately soliciting clients

As in many lawsuits aimed at breakaway teams, UBS’ complaint presents evidence that the Loxahatchee team was planning to solicit clients for their new firm even before leaving. It accuses the team sales assistant Joan Davis, for instance, of printing more than 1,100 pages of UBS client statements on Sept. 8. It also says the advisor defendant Burke printed a 96-page report on required minimum distributions from clients’ individual retirement accounts, or IRAs.

Just three days after the team left UBS, it began receiving requests to transfer client accounts over to Loxahatchee, according to the suit. UBS said it received 22 transfer requests on Sept. 23, including 17 for accounts tied to the defendants’ largest client. 

UBS’ suit charges the breakaway team with breach of contract, breach of fiduciary duties, tortious interference and misappropriation of confidential information. It seeks to have a temporary restraining order barring the departed advisors from soliciting their former clients or using any confidential information they may have taken from UBS until the dispute can be resolved by a Financial Industry Regulatory Authority arbitration panel.