A federal judge dismissed some of Edelman Financial Engines’ claims in its ongoing lawsuit against Mariner Wealth, although many of the most significant accusations remain.
U.S. District Judge Holly Teeter dismissed Edelman's charges of defamation against Mariner, stating the RIA did not identify who made "allegedly defamatory statements" nor who they were made to and how they were published.
“The Court agrees Edelman has not met the pleading standard for defamation,” the judge’s order read. “The complaint does not identify any person who made an allegedly defamatory statement. It only states that ‘Mariner agents’ have said certain things.”
Edelman filed its suit in Kansas federal court last November, accusing Mariner of stealing trade secrets and breaching confidentiality agreements and non-solicitation clauses. According to Edelman, Mariner’s “calculated campaign” to hire Edelman planners and convince them to disclose proprietary client information began in 2021. The firm claimed it lost 10 advisors, about 851 clients and $621 million in the intervening years.
But Mariner fired back in a response last December, accusing the $281 billion Edelman of a “nearly three-year campaign to unlawfully stifle fair competition” in the industry. In its response, Mariner, which manages $105 billion in assets, speculated Edelman intended to send a “chilling public message” to any of its employees opting to leave that they would be the target of litigation.
At the time, Mariner argued the lawsuit should be paused while four pending arbitrations against some of the advisors who left Edelman continue, but the court denied the motion in February. Mariner moved to dismiss all of Edelman’s claims in March, arguing it hadn’t revealed enough facts to support the allegations.
Though the judge agreed with Mariner on the defamation accusations, Edelman’s claims concerning conspiracy and misappropriation were allowed to continue. Edelman alleged Mariner stole trade secrets by “assisting or inducing the planners” to disclose information Mariner knew they shouldn’t.
“These factual allegations are thin, but they are sufficient to allege misappropriation through acquisition at this stage,” the judge’s order read.
The Edelman suit wasn’t Mariner’s only court appearance in recent months. Since late last year, the firm has been increasingly under fire in state and federal courts, including from RWA Wealth Advisors and Avantax, which, like Edelman, accused Mariner of aggressive recruiting tactics that skirt the legal line.
The RWA case was filed in Los Angeles federal court, with Mariner calling for a jury trial in April, while Avantax’s case was recently remanded back to state court in Iowa.
A spokesperson for Edelman said the firm stands by its claims “and will continue to litigate vigorously.” Mariner did not return a request for comment prior to publication.
According to a recent scheduling order, settlement offers may happen in July. Discovery is set to be finished by next February, and a preliminary pretrial conference is set for April 2025 (which means a trial wouldn’t be expected until the middle of next year, at the earliest).