Sanctuary Wealth's awkward handoff to new executives who have turned a small brokerage into a recruiting powerhouse will require the firm to pay $2 million in damages to the onetime CEO.
Sanctuary Wealth Group, Sanctuary Advisors and the predecessor firm that Sanctuary founder Jim Dickson's team
Since Dickson, a 20-year Merrill Lynch executive, joined the relatively small firm and turned it into Sanctuary, it has
In an interview, Starr declined to share Damer's statement of claim or provide many details about what prompted the firing or the sanctions during the arbitration proceedings. Sanctuary's violation of Damer's executive employment and transition agreement led the panelists to order the damages and call for the expungement of the "defamation" from his record, Starr said.
Damer, who is still an advisor based in Indianapolis with a firm called Thurston Springer, feels "very good" about the arbitration decision, Starr said. "He's very happy to have this chapter of his life over. He feels vindicated. He believes that the panel decision makes it clear that he had done nothing wrong."
Industry news outlet AdvisorHub first
In an emailed statement, representatives for Sanctuary pointed out that the panel's decision ordered Damer to transfer ownership of his remaining 6,200 shares in the Noyes company to Sanctuary. Damer had requested damages of nearly $18 million, while Sanctuary denied his allegations and responded with its own counterclaim seeking $3.6 million.
"The FINRA decision is the result of a legacy employee matter involving a former executive of David A Noyes," Sanctuary spokeswoman Michaela Morales said in a statement. "We stand by our decision to no longer employ this executive and that decision is not challenged by this ruling. We are pleased the arbitration panel has awarded the return of thousands of Noyes shares to Sanctuary Wealth. At all times we acted in our clients' best interests."
Brokerage launch complications
Changes in management or ownership
When a brokerage entity such as Noyes and its current brand name of Sanctuary Securities is involved in such a transition, the need to win over the existing advisors looms large to any new manager or investor, according to Bill Hamm,
"If they were to buy us, our advisors would get hit with a higher cost of doing business because we're probably as competitive as anyone out there," Hamm said. "It's all a function of the numbers and how they work."
The nature of the transition from Noyes to Sanctuary remains largely under wraps, since FINRA arbitration is nonpublic and award documents rarely contain much detail.
When Indianapolis-based Sanctuary Wealth
The technical parent firm of Sanctuary Securities that's now majority owned by Azimut, Sanctuary Wealth Group, has been its sole shareholder since January 2015, according to the company's detailed
"When you join Sanctuary Wealth Partners, you can be confident you are joining an exclusive firm of the most forward-thinking advisors in the business," L.H. Bayley, the chairman of the board of Noyes Group, said in a statement upon the launch of Sanctuary in 2018.
In the press release, Sanctuary unveiled an incoming team with $1.7 billion in assets under management that left Wells Fargo Advisors, a harbinger of the many large recruits that have joined in the years following the rebranding.
"We are thrilled to open the doors to Sanctuary and its model of partnered independence," Dickson said in a statement at the time. "Our vision is to enable our elite network of advisors to build the careers they've dreamed of with a true sense of entrepreneurship, transparency and the highest levels of client service."
The case
Damer, the onetime CEO of Noyes, was "supportive" of that approach, which reflected "just a changing of the old guard into the new guard," said his attorney, Starr. About eight months after the unexpected termination, he filed an arbitration claim against Sanctuary and Noyes accusing the firm of violating the transition agreement, as well as fraud, defamation, conversion and interference with business relationships, according to the award. In the BrokerCheck comment on Damer's July 2019 firing, the company cited "allegations concerning the accuracy and completeness of certifications involving the firm's compliance and supervisory processes."
"Mr. Damer emphatically denies the characterization of his departure from David A. Noyes," he said in response on BrokerCheck. "Mr. Damer executed all certifications required of his role accurately and completely."
Six months after the filing of the arbitration claim, a former client of Damer's filed a separate claim seeking $150,000 in damages for alleged unsuitable investments in alternative products, according to BrokerCheck. Without any contribution from Damer, Sanctuary settled the case in March for $57,500, his detailed BrokerCheck file shows. Sanctuary had denied Damer's allegations against his former firm and accused him of breaches of fiduciary duty and contract, along with fraud and other claims involving "misconduct by Damer while serving as a corporate officer," according to the award document.
In two separate orders in December 2021 and April 2022, the panel awarded Damer "reasonable" attorney fees and costs that it assessed at $20,000 in September just before the last rounds of hearing sessions in the case. Damer must pay $5,250 of the hearing session fees, compared to $32,250 in costs to be paid by Sanctuary.
The panelists approved the deletion of Sanctuary's explanation for Damer's departure, to be replaced by language saying that the "company wishes to move in a different strategic direction." To replace the explanations permanently, Damer needs to get confirmation of the award in court and forward a copy of the decision to FINRA's Credentialing, Registration, Education and Disclosure Department.
"In the end it was a breach of contract case," Starr said. "They had counterclaimed against Mark for a huge amount, and the panel found that they were entitled to nothing on the counterclaim. The expungement award was, in our opinion, a vindication of Mark. They didn't just say, 'Remove the bad marks.' They told Sanctuary what to say. That was very important to Mark."
