UBS filed a lawsuit earlier this week against an advisor team managing $1.4 billion in assets that recently left to create Loxahatchee Capital with support from Elevation Point. 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, a retire-in-place plan.
On Thursday, a U.S. district court judge granted a stipulated preliminary injunction, meaning both parties agreed upon the terms. The judge also issued a stay in the case, which will now be argued in FINRA arbitration.
The lawsuit, filed against Managing Partner Andrew Plum, partners Thomas Cullen and Taylor Marsh and Principal Kathleen Burke, claimed that almost all of their clients were inherited through UBS’s retire-in-place program and subject to non-solicitation restrictions.
According to the order, the team is prohibited from soliciting UBS clients who maintain or maintained an account under the ALFA program. They can’t contact these clients, including making an announcement about their new firm.
At the same time, the advisors can process account transfer requests from UBS clients and do business with UBS clients after they’ve opened accounts with Loxahatchee. They’re also allowed to respond to incoming calls and questions from UBS clients and meet with a UBS client if requested.
As part of the order, the team is prohibited from using or disclosing any UBS confidential information, including client lists and contact information. The lawsuit claimed the team misappropriated confidential client information, printing more than 1,100 pages of client account statements before departing.
The advisors must return all tangible confidential information to UBS within 72 hours of the order or certify in writing within that timeframe that they don’t have the information in their possession. They’ve also agreed to have a forensic consultant for imaging, review and deletion of confidential information from their personal mobile phones.
Both parties waive their right to a hearing on UBS’s motion for a preliminary injunction.
“As the merits of this dispute are required to be resolved by a FINRA arbitration panel, the court hereby stays this matter pending a determination of the merits by a FINRA arbitration panel or as otherwise resolved by agreement of the parties,” the order states.
“We are pleased with the outcome of today’s mutual agreement with UBS and remain confident that any further review will reinforce that Loxahatchee Capital has consistently conducted itself with integrity, professionalism, and in full alignment with industry standards,” an Elevation Point spokesperson said in a statement. “Above all, we continue to stand firmly behind the principle that clients deserve the freedom to choose their advisors and where they custody assets.” A UBS spokeswoman declined to comment.
Elevation Point, a minority investor in independent and breakaway advisors launched last year by former Sanctuary Wealth CEO Jim Dickson, announced last month it had taken a minority stake in Loxahatchee, a Tequesta, Fla.-based multi-family office with $1.4 billion in assets. The seven-member team most recently operated as the 440 Group within UBS’s private wealth management division.
In the 15 months since inception, Elevation Point has closed nine deals with independent RIAs with a combined $9.6 billion in client assets.
