Mariner Wealth Advisors has fired back at Edelman Financial Engines’ lawsuit accusing them of recruiting advisors while stealing clients and trade secrets. In Mariner’s response to Edelman’s suit, it requested for the case be halted while related arbitrations and litigation are resolved.
Mariner also accused the $245 billion firm of a “nearly three-year campaign to unlawfully stifle fair competition in the investment advisory services industry.”
In the original complaint filed Nov. 16 in Kansas federal court, Edelman alleged Mariner Wealth Advisors, which manages more than $105 billion in assets, of “flagrant and ongoing efforts” to steal Edelman secrets and clients, interfere with contracts and business expectations, defame the firm’s reputation and “steal the fruits of “Edelman’s multimillion dollar investments in marketing and client goodwill.”
Edelman claimed Mariner repeatedly recruited advisors from the firm, resulting in the loss of at least 851 clients with more than $621 million in managed assets. The suit focused on 10 former Edelman planners who left for Mariner over a period of several years.
But in its motion to stay filed Monday, Mariner claimed Edelman was already suing or started arbitration proceedings against four of those former Edelman employees, all of which are all pending. Mariner claimed these proceedings dealt with many of the same claims Edelman was making in the Kansas suit.
Therefore, Mariner doubted Edelman was bringing the suit based on its fear about lost proprietary information, according to its motion.
“Instead, Plaintiffs wish to send a chilling public message to the marketplace that a financial planner who decides to work for Mariner and leaves in accord with industry standards, customs and practices, will be subjected to meritless litigation, even where clients themselves have affirmatively chosen to discontinue their relationships with (Edelman) and continue working with their financial planners,” Mariner's motion to stay read, asking the court to stop the case from proceeding until the other litigation is settled.
In Edelman’s suit against Mariner, it described the latter firm as lacking the resources to make the millions of dollars in investments Edelman does annually on finding clients, and that Mariner had decided to “free-ride” off Edelman’s work by stealing advisors (and by extension, their clients).
But Mariner disputed this, noting that Edelman’s RIA arm employs more than 1,500 people, including about 650 advisors with more than 420,000 clients.
“It is in this context that Plaintiffs absurdly accuse Mariner of trying to run Plaintiffs out of business,” the Mariner motion read.
In its suit, Edelman detailed how Michael Horne, who’d worked for Edelman, abruptly resigned in July 2021 and immediately began working with Mariner. Edelman purportedly provided Horne with referrals “based on its extensive, multimillion-dollar marketing efforts,” while demanding Horne sign non-solicitation and arbitration agreements with confidentiality obligations.
But in 2021, Mariner recruited Horne from Edelman, which claimed Horne allegedly provided a copy of his non-solicitation agreement to Mariner. Edelman also accused Horne of recreating a client list for Mariner, and argued he broke his agreements with his former employer by contacting those clients and enticing some to follow him to Mariner.
But Mariner and Horne had already filed a suit against Edelman in California, arguing Edelman’s agreements with the departed advisor were illegal under state law, according to Mariner's motion. Edelman allegedly responded by filing to compel both parties into arbitration; the court agreed, and halted the case pending the outcome of that (it remains pending).
“Mariner is sensitive to the undesirability, in general, of cases being dormant on the Court’s docket while related, previously filed litigation is being pursued,” Mariner’s motion read. “Respectfully, however, that is a situation of Plaintiffs’ making. They did not have to commence this case. They can voluntarily dismiss it.”
Representatives from Mariner Wealth Advisors declined to comment. Edelman Financial Engines did not respond to requests for comment prior to publication.
In its suit, Edelman is seeking an order finding Mariner guilty of the accusations, as well as penalties matching “the full amount of damages available by law, including compensatory, consequential and punitive damages."