Home News RCAP and Cetera Sue Lightyear Capital for Poaching Key Execs

RCAP and Cetera Sue Lightyear Capital for Poaching Key Execs

RCS Capital Corporation (NYSE: RCAP), the brokerage firm currently undergoing a pre-arranged bankruptcy, and its independent broker-dealer network, Cetera Financial Group, are suing Lightyear Capital for “poaching” two senior executives while Cetera is being restructured into a private firm.

Lightyear and Canadian pension fund manager, PSP Investments, are in the process of purchasing broker-dealer network, AIG Advisor Group – which is expected to close next quarter, as reported by The DI Wire.

RCAP and Cetera allege that Lightyear is assisting their former employees to breach non-compete clauses by employing them with the express intention of having them work on behalf of The Advisor Group.

The suit claims that Lightyear took “deliberate actions” to persuade “trusted and critically important senior officers of Cetera to join Lightyear and provide it with instant access to, among other things, the company’s invaluable relationships with the independent financial advisors that comprise the backbone of [RCS Capital’s] core asset, its retail business.”

Cynthia Hamel, Cetera’s former senior vice president of strategic operations, and Susan Theder, the company’s former chief marketing officer, allegedly left the company to join former Cetera chief executive officer, Valerie Brown, who is expected to head Lightyear’s new broker-dealer when the purchase of Advisor Group is complete.

Ahmed Hassanein, Cetera’s former chief accounting officer, was also mentioned in the lawsuit for leaving the firm to join Lightyear.

The suit states that Lightyear’s actions constitute breach of contract and tortious interference with contractual relationships, and that Hamel and Theder breached their respective of contracts.

According to the complaint, “Lightyear and its agents have deliberately and knowingly assisted Hamel and Theder to breach their agreements not to compete, and Lightyear has flouted the express prohibitions against soliciting senior company employees and officers…”

Lightyear and RCS Capital signed a non-disclosure agreement in September 2015.

RCS Capital and Cetera believe that Lightyear will continue to recruit its employees and officers during the restructuring process, which would cause “irreparable harm” to Cetera, unless prohibited by the court.

RCS Capital and Cetera filed a temporary restraining order and preliminary injunction against Lightyear, Hamel, and Theder.

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