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Vanguard Sues a Former Top Advisor, Saying He Poached UHNW Clients

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What You Need to Know

  • Matthew Philip Snipes, who had managed $4.75 billion in assets, tried to lure several wealthy clients to his new firm, Vanguard says.
  • One client notified Vanguard he's moving $26 million in assets, according to the suit.
  • The investment giant says Snipes violated a transition payment agreement.

The Vanguard Group has filed a federal lawsuit alleging that a senior financial advisor who resigned from the company in April actively sought to poach ultra-high-net-worth clients to form a competing firm, in violation of employment agreements and legal obligations.

Vanguard, in a suit filed this month in the U.S. District Court for the Western District of North Carolina, contends that Matthew Philip Snipes, a longtime employee responsible for managing more than $4.75 billion in assets, tried to steal wealthy clients for his new venture, Topsail Wealth Management LLC. The clients he served have generated more than $8 million in annual revenues for Vanguard, according to the complaint.

At least five clients with assets totaling $216 million have told Vanguard they were considering transferring, or had decided to transfer, their accounts to Snipes’ new North Carolina firm, with one customer sending notice that he was switching $26 million in assets to Topsail, according to the complaint filed on June 9. 

Snipes visited all these clients in person at Vanguard’s expense while employed with the company this year, then called them following his resignation during what should have been his 60 days’ notice period, Vanguard alleges.

At least three other clients with assets totaling $310 million, whom he visited this year while working for Vanguard, “appear to be at risk of following Snipes to his new firm because they have been reluctant to engage with their new proposed advisors,” the company contends.

Vanguard accuses Snipes of breach of contract, unjust enrichment, misappropriation of confidential information and trade secrets, unfair competition, tortious interference with contractual and business relationships and breach of fiduciary duty of loyalty. The company also makes certain legal claims against Topsail.

Snipes’ attorney, Matthew DeAntonio, declined to comment Wednesday given the ongoing litigation, and Vanguard’s media relations office didn’t respond to an email seeking comment.

In early June, a North Carolina Business Court judge denied Vanguard’s request for a temporary restraining order, after which the Pennsylvania wealth management giant voluntarily dismissed its state complaint and quickly filed a new lawsuit in federal court.

From Entry Level to Senior Advisor

Snipes started working at Vanguard in an entry-level position straight out of college in 2006, with no experience, licensing or client prospects in finance, according to the federal complaint. Vanguard says it devoted “substantial resources” to developing him as a financial advisor and providing growth opportunities over the next 16 years, introducing him to some of its wealthiest clients.

Using these resources, opportunities and client relationships, Snipes rose to Vanguard’s most senior client-facing position, Ultra High Net Worth Senior Financial Advisor, earning hundreds of thousands of dollars a year serving as the main investment manager for wealthy clients, most of whom had invested at least $15 million with Vanguard, the complaint states.

“In return for all this, Vanguard of course expected Snipes to carefully keep and not misuse — during or after his employment — the confidential information, including but not limited to client information, that he obtained by way of his high-ranking position at Vanguard. Vanguard also trusted Snipes that his work efforts would be devoted to furthering the company’s interests, not those of himself or Vanguard’s competitors,” according to the complaint.

The company contends Snipes violated Vanguard’s code of ethics and confidentiality agreements, and that it “would not have employed Snipes or provided him the resources, opportunities and access to client relationships and confidential information that it did absent his promises in these agreements.”

Transition Agreement

Vanguard also alleges Snipes violated a 2020 “transition payment agreement” granting eligibility to receive him two future cash payments, one in June 2022 and the other in June 2023, assuming he remained employed on those dates, in exchange for his promise to provide 60 days’ notice of his resignation and agreement not to work for another employer during those 60 days and not to solicit company clients, prospects or employees for a year after leaving his job.

He notified his supervisor on April 22 this year that he was resigning effective immediately, and formed Topsail on May 4, according to the complaint.

“Vanguard soon learned that Snipes was attempting to steal Vanguard’s wealthiest clients for himself and open up his own shop, which he named Topsail. Since at least April 22, 2022 …  Snipes has contacted Vanguard’s clients to solicit and induce those customers to move their accounts to Topsail,” the complaint alleges. 

One client sent an email to Snipes’ Vanguard address a week after the advisor’s resignation to ask what would happen if he shifted assets to Topsail and notes that Snipes had called him, the suit says.

Citing Snipes’ travel and client entertainment expenses, Vanguard has reason to believe the advisor “had been taking steps to solicit Vanguard’s clients to leave the company and start his own wealth management firm for months prior to his resignation,” the lawsuit contends.

“Snipes has breached his notice, non-disclosure and non-solicitation obligations, as well as his statutory and common law obligations, to the detriment of Vanguard,” the firm alleges. “To this day, he continues his attempts to steal business from the sole company that taught him how to be a successful financial advisor and introduced him to the exceptionally wealthy clients that he has taken or hopes to take for himself.” 

Vanguard seeks compensatory, punitive and exemplary damages in an amount to be proven at trial.

Snipes’ attorney has not yet filed a response to Vanguard’s complaint.