Goldman Sachs has dropped its case against five former financial
advisors and two support staffers in its Atlanta office who
defected to Credit Suisse earlier this month.
Goldman Sachs [GS] filed a notice to dismiss all claims without
prejudice in the U.S. District Court for the Northern District of
Georgia on Friday.
A Credit Suisse [CS] spokesman and a Goldman Sachs attorney
declined to comment. A Goldman Sachs spokeswoman confirmed that the
matter had been resolved but declined to provide any further
comment. No information about a settlement between the parties has
Goldman Sachs filed the claim against its former employees-David
Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John
Pitt, Stephanie Dennard and Kim Tyson- on Tuesday. It accused the
advisors of breaching their non-solicitation agreements by moving
to rival firm, Credit Suisse, and attempting to take their clients
with them. At the time, the advisors were collectively the
principal advisor to 140 clients.
Neither Goldman Sachs or Credit Suisse are signatories to the
Protocol for Broker Recruiting, which permit advisors switching
from one signatory firm to another to take basic client contact
information with them.
Thomas B. Lewis, a partner-in-charge of the employee litigation
group at Stark & Stark, was not involved in this case but said
that these types of cases are typically settled quickly. Lewis says
the firm who poached the advisors will often agree to pay a portion
of the revenue generated by any of the accounts that the advisors'
transferred over for a period of 12 months to their prior firm.
Lewis said that both sides probably came to a quick resolution
to make sure they didn't spend hundreds of thousands of dollars on
legal fees "only to get nothing out of it except unwanted publicity
and embarrassment in the newspapers."
Details about the size of recruitment deals offered to advisors
are particularly sensitive at this time as Washington trains its
spotlight on Wall Street firms, Lewis said.
"Goldman Sachs had to show its employees that it will enforce
its non-solicitation agreements, but it also wants to make sure its
clients aren't dragged into it," he added.
However, the initial claim also provided some interesting
insight into the high-stakes game of advisor recruitment at the
prestigious, ultra-high-net-worth end of the industry.
According to the claim, the employees "abruptly left" Goldman
Sachs on the evening of February 5 after Credit Suisse offered them
"tens of millions of dollars" to move. Goldman accuses the
employees of taking confidential customer lists and trade secrets
in order to lure their clients over to their new firm. The advisors
had all signed non-solicitation agreements.
The defendants were reportedly highly compensated at Goldman
Sachs-David Greene's personal compensation for 2009 exceeded $1
million, according to the claim.
Indeed, Greene was a particular focus of the claim, as he
allegedly wavered at the last moment in his decision to move to
Credit Suisse. Following the employee's Friday afternoon
resignation on February 5th, Greene reportedly called Goldman's
Atlanta office manager, David Fox, at 5am the following morning and
expressed regret about the move, saying it was motivated by "money
only" and revealing that Credit Suisse had agreed to pay him $11
million to leave Goldman Sachs.
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