Mariner Wealth Advisors is currently embroiled in a complex legal situation, as a new lawsuit accuses the burgeoning wealth management firm of colluding with another entity to dampen competition.
This development follows a series of unrelated legal challenges from competitors like Edelman Financial Engines, which claim Mariner engaged in unethical practices such as client poaching and misappropriation of trade secrets.
In this recent litigation, plaintiffs Jakob Tobler and Michelle McNitt assert that their past employer, previously under the Mariner umbrella as Tortoise Capital Advisors, along with Mariner itself, other Mariner branches, and American Century Investments, participated in a "no-poach" conspiracy. This alleged scheme was designed to undermine wages and stifle competition within the sector. Mariner Wealth Advisors has indicated its intention to "vigorously" contest the allegations brought forward by Tobler and McNitt, labeling the lawsuit as baseless and poorly timed.
American Century Investments, also implicated in the lawsuit, intends to address the allegations through legal proceedings, noting that neither Tobler nor McNitt were employees. The firm has expressed its commitment to maintaining ethical competition standards in accordance with legal and regulatory guidelines. Tortoise's response to the lawsuit has not been forthcoming.
Filed in federal court on February 23, the lawsuit casts a spotlight on a previous non-prosecution agreement between Mariner, its former affiliate Montage, and the Department of Justice's Antitrust Division. This agreement disclosed that from 2014 to 2018, the entities engaged in anti-competitive conduct aimed at curtailing competition for asset and wealth management professionals. Although the agreement does not disclose the identity of the third party involved in the conspiracy, it is a central piece of evidence in Tobler and McNitt's legal challenge.
Mariner's response to the lawsuit emphasizes adherence to ethical, transparent, and compliant business practices. The firm highlighted that the non-prosecution agreement with the Department of Justice, contingent on adherence to its terms, resolved the matter without impacting its clientele, the caliber of its services, or its commitment to making a positive difference in the lives of many.
Despite the allegations dating back several years, Tobler and McNitt only became aware of the purported misconduct six months prior to filing the lawsuit. This was after the non-prosecution agreement necessitated a $1 million compensation payout for current and former employees affected by the outlined conduct. This compensation fund, managed by an appointed administrator, began reaching out to potential claimants in August 2023, offering them a chance to file for compensation without precluding further legal action against Mariner.
The lawsuit accuses the defendants of covertly engaging in practices aimed at limiting competition in the hiring of asset and wealth management professionals, significantly impacting their compensation and career advancement opportunities. The claimants seek class action status for their lawsuit, alongside monetary damages and other penalties against Mariner, a firm recognized for its rapid growth in the RIA sector, managing over $122 billion in assets as of the end of December.
Mariner's history of acquisitions and divestitures, including the sale of its stake in Tortoise to Lovell Minnick and Tortoise management in 2017, and the winding down of Montage, an asset management affiliate, in 2017, underscores the complexity of the legal and ethical challenges facing the wealth management industry today. The lawsuit not only highlights the allegations of past misconduct but also raises important questions about the standards of competition and employee treatment within the sector.
