A judge recently denied a motion related to a civil complaint filed by U.S. Bank alleging a prominent former executive—the head of its advisory business that caters to the richest clientele—stole trade secrets and breached his contract by poaching employees to join him at his new company, Cresset Family Office, a division of Cresset Wealth recently touted as one of the fastest-growing registered investment advisors in the nation.
During a hearing on Oct. 2, Judge Edward Chen of the U.S. District Court, Northern District of California, partly denied a temporary restraining order against Michael Cole, the founder and president of U.S. Bank’s Ascent Private Capital Management, who left this summer to lead competitor Cresset Family Office.
The bank filed a lawsuit Sept. 28 alleging that Cole gathered confidential, proprietary information before he left the company in order to prepare a strategy for Cresset Family Office, a division of Cresset Capital Management. Cole and Cresset deny the allegations.
“We are disappointed that U.S. Bank has taken this action and remain committed to building an industry-leading, independent wealth management platform because we believe clients deserve better,” Cresset said in a statement about the lawsuit. U.S. Bank declined to comment on the lawsuit that is ongoing.
To keep Cole from allegedly continuing to use the documents to the advantage of Cresset before a verdict is reached, U.S. Bank filed a motion for a temporary restraining order against the defendants.
However, that motion was partly denied. Although there was evidence Cole obtained the documents while he was still working for Ascent, U.S. Bank “failed to show that the documents are of a kind that had no relevance to his job as Ascent’s president and thus an inference of access in order to misappropriate is not warranted,” Chen said in the summary filed Oct. 2.
In the complaint, U.S. Bank accused Cole of transferring four documents with sensitive information to a USB drive and using them to develop a presentation he titled “Cresset Family Office—Strategic Planning Session” that included some of the exact same information that belonged to Ascent.
He then allegedly met with members of Cresset, who were unnamed in the complaint, on May 17 at the Vitale Hotel in San Francisco and presented the information as the two parties worked out an agreement regarding his employment.
The complaint noted that Cole wrote in his Ascent calendar “BLOCK 7:30-1:00 | Private Prospect Meeting” during the time of the meeting with Cresset. But another agenda belonging to Cole obtained by the bank showed an agenda with Cresset including “Marketing/Business Development” and a “Financial Model.” Cole was named head of Cresset Family Office only weeks after the meeting.
Part of the motion for a temporary restraining order was granted at the hearing after Cole and Cresset agreed to return two of the four documents, all of which were sealed by the court and not publicly available.
Chen also rejected the U.S. Bank’s complaint that Cole had breached his contract with Ascent by encouraging employees to join him at Cresset. Evidence only showed Cole is barred from contacting Ascent customers for one year, not employees, Chen noted in the summary.
Although no Ascent employees left until five weeks after Cole, several of those who did departed on the same day and promptly began working for Cresset, according to the complaint. The lawsuit claimed that Cresset, which is also named as a defendant, must have been knowledgeable of Cole’s communication with Ascent employees leading up to his departure.
In addition to the Ascent employees that followed Cole to Cresset, advisors from other firms have left to join the fast-growing wealth manager that topped $3 billion in assets under management within a year of its founding.
The Chicago-based firm, co-founded by Eric Becker, one of WealthManagement.com’s Ten to Watch in 2019, has hired more than 60 employees across business segments Cresset Wealth Advisors, Cresset Family Office and Cresset Partners, its private investing arm.
