Can advisors accidentally sue their employers? Robert W. Baird advisor Jim Kemp may find out.
Kemp, 65, is suing his former employer, Hilliard Lyons, for alleged age discrimination, a claim the Kentucky-based firm denies. At the same time, Baird is buying Hilliard in a deal set to close in late 2019.
If the lawsuit doesn't reach a conclusion before the acquisition is finalized, Kemp’s attorney, Mark Byrne, is unsure what will take place.
“I can’t guess at this one, because we don’t have the information on the acquisition,” he says. Byrne adds that Baird has been “very fair with Jim” thus far.
Hilliard Lyons’ attorney and a spokeswoman at Baird did not respond to requests for comment.
Kemp’s complaints with Hilliard Lyons began back in April 2018, according to the lawsuit, which was filed in the southern U.S. district court of Ohio. Terrence Hosty, a complex manager at Hilliard Lyons, called Kemp into his office late that month and told him he could either resign or be fired — Kemp had undermined his authority, according to the complaint.
Up until then, Kemp had not been aware of any conflict prior to the termination, according to Byrne.
Kemp had been promoted three times, given the titles branch manager, vice president of sales, and later, senior vice president of sales, according to the lawsuit, during his 34-year career at the Kentucky-based regional BD.
“All of these positions were obtained by Kemp as a result of his stellar performance,” the lawsuit says.
Kemp asserts that the accounts he developed at Hilliard Lyons were assigned to a new advisor, at least 20 years younger than him. In addition, Hosty had regularly referred new client accounts to younger advisors within the complex, and never to Kemp. “As a result of Kemp’s age, Hosty unlawfully made those referrals and terminated Kemp,” the lawsuit says.
Kemp filed a discrimination charge in August with the Equal Employment Opportunity Commission (EEOC) before filing a lawsuit in court.
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Jason Kirkland, a former Baird employee, has sued the firm for allegedly withholding his compensation.
December 28 -
The deal could grow Baird’s headcount by about 44%.
November 27 -
The broker-dealer alleges Jason Kirkland violated company policy, used confidential information and broke his 12-month non-solicitation agreement, among other claims.
November 15
In a response filed in court, Hilliard Lyons denies the allegations, asserting that age played no role in Kemp’s termination, and alleges that the complaint was not filed in a timely manner.
If Kemp and Hilliard Lyons are not able to resolve their dispute before Baird’s acquisition of the firm, who will be responsible for concluding the case — Baird or Hilliard Lyons? In short, it depends.
When a buyer purchases stock, the investment comes as is, although with limited downside on liability. However, if a firm purchases assets outright, it’s likely that it would exclude the case in the deal, notes an attorney not involved in the case, Paul Foley. “Typically, claims that pre-date the deal would be carved out and not assumed by an asset purchaser," Foley says.
Whether or not Baird assumes responsibility, it is unlikely to change the trial’s outcome, Foley says, although Baird will need to be careful not to take retribution against the advisor.
Still, the whole ordeal will certainly be uncomfortable for all parties involved, he says.
“I’m sure he didn’t expect [this] when he filed his suit against Hilliard Lyons,” Foley says.
