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Former Steward Advisors Sue Firm as They Depart for LPL

Posted on October 27th, 2023 at 2:29 PM
Former Steward Advisors Sue Firm as They Depart for LPL

From the desk of Jim Eccleston at Eccleston Law 

Experienced brokers have witnessed a significant increase in recruiting offers in recent years. However, a lawsuit filed against Steward Partners Global Advisory last week illustrates the consequences that can arise when these deals, particularly those involving equity, take a negative turn. 

Two Texas advisors who transitioned to LPL Financial admitted in their lawsuit that Steward accused them of underperforming. Consequently, Steward aimed to recover the millions it had initially disbursed to them in cash and company shares when they joined Wells Fargo Advisors in 2020. In their complaint, Rick A. Fuchs and Graham P. Heck are pushing back by alleging that Steward inflated the value of their recruiting deal by providing misleading information about the shares' worth.

According to AdvisorHub, in 2021, the advisors asserted that the shares were valued at just $13.22 per unit, resulting in a collective decrease in the value of their deal by $600,000. Moreover, the advisors alleged that, in January 2022, Steward, facing a "cash crunch" initiated reclaiming a portion of the recruiting bonus from advisory teams.

Under the threat of termination, the advisors repaid $1 million and two-thirds of the shares they had received. They are now pursuing an unspecified amount of damages, claiming that Steward violated federal securities laws.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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