Companies sue over executives ‘poaching’

Companies sue over executives ‘poaching’

Companies sue over executives ‘poaching’ Two firms are taking action against Lightyear Capital, alleging that it played a key role in executives being poached to another firm.

Both RCS Capital and Cetera Financial, the brokerage arm of RCAP, have decided to sue the private equity firm which had previously being in charge of Cetera until it was sold to RCAP back in 2014 for $1.1 billion. Lightyear, along with the Canadian Public Sector Pension Investment Board had announced its plans to acquire the American International Group (AIG) Advisor Group back in January.

Now, the lawsuit, which was filed as part of the bankruptcy proceedings of RCAP, alleges that Lightyear lured “critically important senior officers” who would also be able to give the firm access to RCAP’s “invaluable relationships with independent financial advisors”. These advisors were described as the “backbone” of the company which boasts 10 broker-dealers and 9,100 advisors.

It is then suggested in the lawsuit that executives from Cetera would move across to Lightyear and then on to the AIG Advisor Group as soon as the deal is completed.

In particular, the complaint focuses on Susan Theder and Cynthia Hemel. Hemel worked as the senior vice president for Cetera within its strategic operations group. Meanwhile, Theder was the firm’s chief marketing officer. Both resigned during January in order to move to Lightyear.

According to Cetera, the duo had the possibility of targeting the longest standing and best financial advisors at the company using the insight they gained during their employment.

In addition, Lightyear is accused of breaking a confidentiality agreement that was signed back in September, 2015. It had met RCAP during 2015 as one of a potential 10 investors: it then signed confidentiality agreements about the raising of capital, according to reports. It is alleged that no bid was ever submitted by Lightyear even though the non-disclosure agreement was signed.