Saturday, April 20, 2024

Mariner Wealth Avoids DOJ Charges by Admitting to Non-Poaching Scheme -Dlight News

Mariner Wealth Advisors CEO Marty Bicknell admitted last year that the firm “conspired” with a competitor not to hire or solicit each other’s employees, according to a copy of a non-prosecution agreement with the U.S. Justice Department’s Antitrust Division. 

A new lawsuit filed by several former employees claimed the deal helped Mariner avoid criminal charges resulting from the alleged scheme. 

Jakob Tobler and Michelle McNitt filed the suit in a federal court in Kansas last week. It names Mariner and several of its current and former subsidiaries and American Century Investments, the firm with which Mariner higher-ups allegedly conspired. 

According to their suit, Mariner and American Century clandestinely agreed to “restrict, suppress and eliminate their competition in the recruitment and hiring” of asset and wealth management employees.

“(Mariner and American Century) entered into this agreement for one clear and overarching reason – so they could pay these highly-skilled employees less than they would be paid in a competitive market,” Tobler and McNitt’s complaint reads.

Tobler and McNitt previously worked for Tortoise, a former Mariner subsidiary specializing in institutional asset management, which Mariner sold in 2017. 

Their suit names numerous defendants, including Mariner Wealth and Mariner Holdings, Tortoise and Montage Investments, an affiliated investment management arm of Mariner, which helped handle the firm’s institutional asset management until it exited that space in 2018, according to S&P Global Intelligence.

The suit intends to be a class action, representing all Mariner employees impacted by the alleged scheme.

In the suit, Tobler and McNitt claimed the Justice Department allegedly began investigating Mariner for antitrust violations before 2023. Mariner entered into a non-prosecution agreement with the DOJ on May 15, 2023, to avoid charges (the plaintiffs filed a copy of the NPA along with their complaint).

In the NPA, Mariner admitted that between March 2014 and 2018, some of its employees, including an unnamed “senior-level executive,” conspired to suppress competition between the firm and American Century by agreeing not to hire or pursue employees at the opposing firm.

In doing so, Mariner “diminished employee mobility” between the firms and “limited the opportunities of employees to negotiate for better compensation, benefits, and other terms of employment through a move to the Labor Market Competitor,” the NPA read.

Representatives for Mariner did not respond to a request for comment. 

The DOJ justified the agreement based on Mariner/Montage’s admission of the misconduct and the lack of prior, similar misconduct, as well as the firm’s cooperation with the Antitrust Division and amenability to resolve liability. 

As part of the DOJ agreement, Mariner agreed to implement an antitrust compliance program and set aside $1 million to “be used to compensate current and former employees of Montage and the Relevant Related Entities” for their losses. 

Among those who signed the NPA dated May 15 of last year were Mariner CEO Martin Bicknell, Mariner board members Cheryl Bicknell and Gary Henson and Mariner General Counsel and Chief Compliance Officer Anne Dorian.

According to Tobler and McNitt’s complaint, American Century also struck an NPA with the Justice Department to avoid antitrust charges by agreeing to pay current and former employees $1.5 million. The duo cited a 2021 news report from KCUR Kansas City, which refers to the DOJ’s letter spelling out the agreement. According to KCUR, the DOJ did not name American Century’s co-conspirator in that letter.

The consequences of Mariner and American Century’s plot to artificially deflate wages extended beyond employees’ income, Tobler and McNitt alleged. With employers contributing a certain percentage of an employee’s salary to retirement plans, an artificially low wage can impact that worker’s retirement savings.

“Thus, upon retirement, the worker is left with much less in his or her plan than a worker in a competitive market,” the complaint read. “Accordingly, Plaintiffs and Class members will feel the consequences of Defendants’ unlawful no-poach agreements for the rest of their lives.”

Mariner Wealth is embroiled in several suits filed by rival firms, including Edelman Financial Engines, Avantax and RWA Partners. Though the details differ, all the firms accuse the Kansas-based Mariner of encouraging and supporting advisors joining the RIA to break the confidentiality and non-solicitation agreements of previous employers.

Edelman’s suit alleged Mariner had launched a “calculated campaign” to lure their business. Last week, a judge denied Mariner’s request to pause the suit while Edelman continued in arbitration proceedings with several advisors who left them. 

In a previous interview with WealthManagement, Bicknell said he has “complete confidence” in the firm’s strategy and platform as it expands from its current roster of 2,000 advisors.

“We have an objective to grow to 5,000 advisors over the next three years, and we’re in search of that talent, and we are going to continue to recruit aggressively,” he said. “We’ve built an advisor attraction model that we’re very proud of.”

Diana Britton contributed additional reporting.

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