- Bank claims violation of non-compete accord in New York suit
- Lyell Wealth Management founders accused of taking 90 clients
Bank of New York Mellon Corp. sued former owners of a wealth management firm it bought, claiming they violated a non-compete agreement by setting up a new company and luring away clients and employees.
BNY Mellon agreed to buy the assets of Atherton Lane Advisers LLC in January. Under the terms of the deal, BNY paid “tens of millions of dollars" to the owners of the firm, with additional earn-outs totaling 32 percent of the closing price over three years, according to the complaint filed Thursday in Manhattan federal court.
The terms of the deal precluded the owners from soliciting business from Atherton clients or recruiting employees away from the firm until the earn-out payments were completed in April 2019, according to the suit. But before the sale was even completed, the owners launched a new asset management firm and began soliciting clients and employees to follow them to the new firm, BNY Mellon claims.
The lawsuit names as defendants the new firm, Lyell Wealth Management LLC and its co-founders, all of whom worked for of Menlo Park, California-based Atherton. One of the co-founders, Kevin Connell, didn’t immediately respond to a phone call seeking comment on the suit.
Lyell is also based in Menlo Park. BNY Mellon claims the founders already have taken $1.6 million in distributions from the closing payment, while also luring away 90 clients with assets of $214 million, representing $1.7 million in lost revenue per year to BNY Mellon. The founders also have asked at least two employees to leave Atherton to join the new firm, according to the suit.
The case is BNY Mellon N.A. v. Lyell Wealth Management LLC, 1:16-cv-06896, U.S. District Court, Southern District of New York (Manhattan).