U.S. Bank has sued three former wealth managers for allegedly trying to lure dozens of affluent clients – and their nearly $700 million in managed assets – after they simultaneously quit last month to join RBC Wealth Management.
Bankers James Kirk, Darcy Frederickson and Jason Beumer primarily serviced clients with between $10 million and $75 million in assets, and some clients worth far in excess of that, according to the lawsuit.
But after they all quit April 15 to work at Royal Bank of Canada, U.S. Bank allegedly discovered that the three had “aggressively pursued” their U.S. Bank customers “to induce them to leave U.S. Bank or otherwise to solicit their business,” according to a lawsuit filed in Minnesota on April 30.
Kirk, Frederickson and Beumer had each signed contracts, as a condition of their employment, restricting their use of confidential information belonging to U.S. Bank or its customers, and also agreeing not to solicit U.S. Bank clients after their employment.
In an email to U.S. Bank, the bankers’ attorney, Stevens & Lee partner Thomas Lewis, told a representative of the bank that Kirk, Frederickson and Beumer had “deleted all US Bank client info from their phones before they joined RBC,” and assured the representative that his clients were complying with their restrictive covenants.
Through its own investigation, however, U.S. Bank found that the trio contacted 24 customers on or soon after April 15. One such customer contacted by Frederickson told U.S. Bank that Frederickson had offered to move the customer’s relationship to RBC Wealth Management, “and tried to persuade the client to do so by stating that the client’s new Portfolio Manager at RBC Wealth Management would be the former boss of their current Portfolio Manager at U.S. Bank.”
The customer told U.S. Bank that Frederickson disparaged the bank, allegedly claiming that the direction U.S. Bank was going was “bad” for customers.
At least one of the 24 customers has informed U.S. Bank that he would be moving his relationship to RBC Wealth Management, to work with Kirk and Beumer. He had been a U.S. Bank customer since 1992, several years before Kirk, Frederickson or Beumer began working at the bank.
“For the 24 customers that have verified they were solicited by one or more of the Defendants thus far, these customers account for combined assets under management of nearly $700 million and $4 million in annual revenue,” U.S. Bank wrote in court documents.
“If even a fraction of these customers move their business from U.S. Bank to RBC Wealth Management as a result of Defendants’ solicitation efforts, it will be very difficult to calculate the lost revenue and lost profits that U.S. Bank will experience because variables such as investment growth, contributions, distributions, length of future relationship, and beneficial introductions the client could make to the U.S. Bank team would all contribute to U.S. Bank’s losses,” the lawsuit alleged.
In response to a request for comment, a U.S. Bank spokesperson told Banking Dive that the court filing outlines the bank’s position.
An attorney for Kirk, Frederickson and Beumer did not immediately respond to a request for comment.
In addition to compensatory damages and attorneys’ fees, U.S. Bank has asked Judge Laura Provinzino to issue a temporary restraining order barring Kirk, Frederickson and Beumer from soliciting U.S. Bank customers and from using its confidential information.
The hearing for the temporary restraining order is set for May 15.
