Bowing to legal pressure from the former broker dealer it used to own, Lightyear Capital agreed not to poach 43 top executives of Cetera Financial Group – at least for now.
Lightyear, which recently purchased the B-D network AIG Advisor Group, struck an agreement with Cetera's parent RCS Capital on March 11. The agreement awaits approval from a bankruptcy judge.
RCS sued Lightyear in February for hiring away Cetera's former chief marketing officer, Susan Theder, and its former senior vice president of strategic operations, Cynthia Hamel.
Hamel and Theder are now working as consultants at a Lightyear affiliate. Valerie Brown, who ran Cetera as CEO while Lightyear owned it, will become executive chairwoman of AIG Advisor Group overseeing Hamel and Theder, once Lightyear's purchase of the B-D is finalized, as expected by later this year.
Both Lightyear and Cetera declined to comment on the agreement through spokespeople.
DEFECTIONS AMIDST ATTRITION
The agreement is intended to protect Cetera as its parent RCS Capital goes through a high-profile bankruptcy reorganization. Retaining its affiliated brokers is of paramount importance to RCS during this time, the company has said in bankruptcy filings.
While Cetera’s Twitter feed description in February still said it had 9,700 brokers, the actual number had dropped to "approximately" 9,100, court documents revealed. The Twitter account now says "nearly 9,100."
In the midst of advisor attrition, the defections of Hamel, Theder and its Chief Accounting Officer Ahmed Hassanein to Lightyear came as a blow.
The agreement does not pertain to Hassanein, who will be free to work for Lightyear immediately. Hassanein’s LinkedIn profile currently shows him as working at Cetera.
Hamel and Theder will be free to work for Lightyear companies after Sept. 4, or upon approval of the RCS bankruptcy plan, whichever is later. This time span is capped at Dec. 4.
RCS Capital claims they broke employment agreements in moving to its competitor. Hamel and Theder deny any wrongdoing in the agreement, and also say they have not downloaded any confidential information from Cetera computers.
As part of the agreement, Hamel and Theder say they will not share any confidential information with their new employer.
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