A financial advisor dropped by his Ameriprise-affiliated employer, Seven Bridges Wealth Advisors, has accused the Poughkeepsie, New York, firm and its managing partners of defamation, alleging they sent a damaging email to clients, employees and contractors implying he had engaged in misconduct.
The alleged defamation and breach of contractual obligations caused Armando Merino, who had been associated with the firm for nearly five years, to lose 33 clients representing at least $19.3 million in assets under management, according to a lawsuit filed Tuesday in New York Supreme Court in Dutchess County. Ameriprise is not named in the suit.
“The intended audience of the Email understood it to be conveying that Merino had engaged in professional misconduct," the lawsuit states. "Dozens of clients and colleagues contacted Merino after receiving the Email. Many stated that the Email made them ‘nervous,’ ‘horrified,’ or ‘concerned.’ Some even referenced Bernie Madoff and questioned whether Merino had stolen their money.”
Seven Bridges in January sent the email to all its clients, including hundreds whom Merino had never met or worked with, as well as past and current employees, suggesting the firm had made a break with him to uphold its high service levels, according to the suit, which contends the email “irreparably tarnished” the advisor’s professional reputation.
In December, the managing partners had told Merino to leave the firm and set up his own Ameriprise franchise and ultimately agreed to provide services to him through January, according to the suit. However, on Jan. 13, after learning that a second employee wanted to join Merino’s new firm, “they lashed out,” it contends.
Without notice, the partners shut down Merino’s work email and cut off his access to Seven Bridges’ IT systems and client files, the complaint contends. Three days later, the suit alleges, the partners sent this email to clients, employees and contractors:
“‘As our practice continues to grow and evolve, we are continuously evaluating our internal team and processes to help make sure we uphold a high level of service and attention for all our clients. In light of this, we have made the difficult decision to unaffiliate [sic] with Financial Advisor Armando Merino and discontinue his relationship with Seven Bridges Wealth Advisors.’”
The complaint contends the email “falsely suggested that Defendants possessed undisclosed facts demonstrating that Merino did not ‘uphold a high level of service and attention’ to clients, when Defendants possess no such facts. The Email implied that Merino had engaged in (undisclosed) improper, unprofessional conduct.”
The substantial majority of lost clients were accounts that Merino had purchased from Seven Bridges and two of the three managing partners, and each lost client ended their relationship with Merino shortly after receiving the email, Merino alleges. Collectively, they generated about $147,077 annually in fees and commissions to Merino, the suit says.
The vast majority of lost clients “returned to Seven Bridges, where Defendants are now earning hundreds of thousands of dollars in commissions and fees that rightly belong to Merino,” the complaint alleges. It contends Merino, hired as an independent contractor, had enjoyed a roughly 99% client retention rate while at Seven Bridges.
Among the text messages that he received from clients after they’d received the email, the suit contends, one says “it seems like you’ve done something wrong for them to let you go! And at 7:40pm is unprofessional in my opinion.”
Another reads, “Unfortunately, it was a horrible tone,” while another says, “The email was ominous.”
The suit also alleges the firm withheld $60,000 in wrap fees from Merino’s last 30 days at Seven Bridges, refused to let him keep his Ameriprise email when he set up his new business and refused to provide his contact information to a client who wanted to transfer her accounts to his franchise. Merino is now managing partner Arbor Capital Wealth Advisors, according to the firm's website.
Other claims include tortious interference with business relations and breach of transition agreement.
Seven Bridges had no immediate comment, someone at the firm told ThinkAdvisor by phone Thursday. Ameriprise declined to comment, a representative said Thursday by email.
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