The Vanguard Group is suing one of its former ultrahigh-net-worth financial advisors for allegedly violating a one-year nonsolicitation agreement he signed while an employee.
The financial services giant accuses Matthew Snipes of breach of contract and misappropriation of trade secrets in its lawsuit filed June 9 in a federal court in North Carolina.
Vanguard Group Inc
Courtesy of Vanguard
It’s the latest legal battle between wealth management firms and advisors over client contacts. It is also the second time in recent weeks that Vanguard has filed a case against Snipes. The company’s first effort, seeking a temporary restraining order, was denied by a state judge.
The legal disputes between Vanguard and Snipes started after he had resigned from the company April 22 to found an independent practice, Topsail Wealth Management, in Charlotte.
In addition to allegedly violating nonsolicitation agreements, Vanguard accuses Snipes of violating a contract he signed that required him to give 60 days notice before resigning.
There’s a lot at stake in the disputes between the two sides. Snipes served as an advisor to ultrahigh-net-worth clients, most of whom had $15 million or more invested with the company. In total, he oversaw about $4.75 billion in assets under management for Vanguard clients, whose business generated approximately $8 million in annual revenues for the company, according to the lawsuit.
One of Snipes’ clients has already notified Vanguard that he is transferring assets worth $26 million from Vanguard to Snipes’ new firm, according to the lawsuit.
In Vanguard’s first attempt to seek legal redress, the company filed a lawsuit May 31 in a North Carolina court, seeking a temporary restraining order against Snipes for allegedly soliciting clients to join him at Topsail. Snipes denied the allegation. A state judge turned down Vanguard’s request, writing that it had “failed to show a likelihood of success,” according to a June 6 order.
On June 8, Vanguard voluntarily dismissed its state court case against Snipes.
The company’s new lawsuit filed in federal court seeks unspecified damages, attorneys’ fees, and other relief. The lawsuit says Vanguard is seeking relief from a federal court because the parties are from different states and the amount of damages sought is greater than $75,000.
A Vanguard spokesperson could not be reached for comment. Snipes’ attorney, Matt DeAntonio, declined to comment on the case.
While Vanguard is known for its fund management operations, the company also provides wealth management services to wealthy individuals.
Snipes began his financial services career at Vanguard as a client relationship associate in 2006, eventually becoming a ultrahigh-net-worth senior financial advisor in 2015, according to the lawsuit.
As a Vanguard advisor, Snipes did not actively prospect for clients, according to the lawsuit. Instead, Vanguard introduced him to existing clients and prospective clients. “In other words, the personal and financial information of the Vanguard clients who Snipes serviced was not independently known to Snipes but was provided to Snipes by Vanguard and by virtue of Snipes’s position,” the suit states.
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