judge reading lawsuit
A federal judge stayed legal proceedings initiated by the $16.8 billion First Technology Federal Credit Union against three former financial advisors accused of violating their contracts and trade secret laws, resulting in more than $200 million in losses.
When First Technology sued the former employees as well as their new employers, it also filed an arbitration action with the dispute resolution section at the Financial Industry Regulatory Authority (FINRA). In addition to a lawsuit, the credit union filed a motion for a temporary retraining order to stop the financial advisors from soliciting First Technology members.
U.S. District Court Judge B. Lynn Winmill in Boise, Idaho denied that restraining order in October.
In December, Winmill granted a motion by the former employees to stay the lawsuit, citing the Federal Arbitration Act, which requires litigation to pause until the arbitration process concludes. FINRA data showed that arbitration cases completed in 2024 averaged 12.5 months from filing to closure.
The judge’s stay did not apply to the investment firms the advisors joined after leaving First Technology.
The San Jose, Calif.-based credit union sued its longtime financial advisors Alfred Jackson, Sage Kendall and Kristina Hernandez, all Idaho residents, for allegedly stealing confidential data, including member lists, and using that information to solicit First Tech members. The lists contained names and contact details for 683 members with assets totaling more than $520 million.
Within a month of the trio resigning and joining competing investment firms, First Tech claimed it lost more than $205 million and $1.1 million in recurring annual revenue, per the lawsuit filed in U.S. District Court in Boise in October.
Jackson, Kendall and Hernandez joined LPL Financial. Jackson also launched Riverside Financial Planning last June. Kendall became a partner at Family Tree Financial, founded by Chris Eggleston. Osaic Wealth holds the securities registrations for Kendall and Eggleston, according to court filings.
LPL Financial, Family Tree Financial and Osaic Wealth submitted motions in December to dismiss the First Technology lawsuit. They are expected to file their legal arguments in support of their motions by Jan. 30, according to court filings.
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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