FINRA Panel Order Advisor to Pay $2.6 Million for Soliciting Former Clients

Posted on June 26th, 2024 at 3:14 PM
FINRA Panel Order Advisor to Pay $2.6 Million for Soliciting Former Clients

From the desk of Jim Eccleston at Eccleston Law

A FINRA arbitration panel ruled against advisor Nicole E. Sennett for allegedly attempting to solicit former clients after selling her practice to Monocacy Wealth Partners. The panel ordered Sennett to pay $2,557,000 in compensatory damages to Monocacy, based in Bethlehem, Pennsylvania, and its founding partners, Scott A. Brantingson and Scott M. Brantingson.

According to AdvisorHub, in addition to the monetary damages, the arbitrators issued an injunction preventing Sennett from soliciting any clients listed in the asset purchase agreement. She also is prohibited from discussing or disparaging Monocacy or its founders, giving financial advice to, or accepting any listed clients, even if the client initiates contact.

Sennett faces additional liability for damages amounting to four times 1 percent of any assets that transfer after the award is issued. Sennett counterclaimed that Monocacy breached the asset purchase agreement by refusing her access to certain books and records. She also requested the panel to void the asset purchase agreement. As reported by AdvisorHub, the panel rejected her counterclaims.

Although Raymond James was not a named party in the arbitration, it controlled the payments to Sennett under the asset purchase agreement. Future payments owed to Sennett are to be released to Monocacy to offset the $2.6 million she owes.

AdvisorHub reports that this case highlights the ongoing risks for buyers in wealth management transactions, as sellers sometimes attempt to restart their practice. Courts have occasionally invalidated non-compete agreements, siding with sellers in such disputes.

 

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

Tags: eccleston, eccleston law, finra

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