Three former senior executives of independent broker-dealer Woodbury Financial Services Inc. lifted confidential information about the firm's brokers and took it to another broker-dealer, according to a federal lawsuit filed by The Hartford Financial Services Group, Woodbury's parent.
In a lawsuit filed on Aug. 29 in U.S. District Court for the District of Minnesota, The Hartford claims that three former Woodbury regional vice presidents, who oversaw a total of 188 registered reps, took the confidential information “in their final days as employees (and often on their absolute final day as employees).”
According to the lawsuit, the three executives left Woodbury Financial in late July. In March, The Hartford announced plans to sell Woodbury as part of a larger restructuring.
The Hartford is seeking a temporary restraining order against the three executives, Scott Carlson, Kevin Corrigan and Robert Cairns, and is preparing a parallel claim for arbitration with the
Financial Industry Regulatory Authority Inc., according to the lawsuit.
Regional vice presidents supervise and act as the liaison for reps operating in the region.
“This taking of confidential information was done without approval from The Hartford,” according to the complaint.
After the three executives left, The Hartford “learned some alarming facts” with regard to the company's confidential information, according to the complaint. The actions of the three executives “represented a concerted attempt to take and use The Hartford's confidential information for competitive purposes.”
For example, Mr. Carlson allegedly sent a series of e-mails to his home that had information about Woodbury reps, including their gross commission, details of top producers and advisers' addresses and contact numbers, according to the lawsuit.
According to the lawsuit, the three executives now work for another independent broker-dealer, Questar Capital Corp., which is owned by Allianz Life Insurance Co. of North America Inc.
Questar and Allianz were not named as defendants in the lawsuit.
An Allianz spokeswoman, Sara Thurin Rollin, wrote in an e-mail: “With their combined sales and business development expertise, these new divisional vice presidents will augment Questar's sales team. Because of the ongoing litigation, we are not in a position to make additional comments.”
Robert DeMallie, a spokesman for The Hartford, declined to comment.
In July, American International Group Inc. agreed to buy Woodbury Financial, which would operate under
AIG's Advisor Group network of broker-dealers. Woodbury produced $254 million in gross revenue last year.
When the three executives left, Woodbury had 16 regional vice presidents and more than 1,300 independent registered reps and financial advisers. It was not clear whether other regional vice presidents had left after The Hartford said it wanted to sell the firm.
The structure of
AIG's deal to acquire Woodbury, which is expected to close by year-end, has several layers and contains a number of performance benchmarks. The deal could net The Hartford between $62.5 million and $140 million.
