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September 16, 2024 at 02:06 PM
What You Need to Know
- Michael R. Gallagher serviced customers with $600 million in AUM that generated about $4 million a year in fees, a lawsuit says.
- Gallagher quietly resigned over Labor Day weekend and, according to the suit, started urging clients to follow him.
- The former portfolio and relationship manager violated an agreement to give 21 days' notice and avoid soliciting clients, Glenmede alleges.
Boutique wealth management firm Glenmede Trust alleges former portfolio and relationship manager Michael R. Gallagher, who recently resigned after nearly 25 years, violated agreements with the business by soliciting clients to follow him to his new employer.
Gallagher serviced customers with $600 million in assets under management that generated about $4 million a year in fees for Philadelphia-based Glenmede, according the lawsuit, filed Friday with the U.S. District Court for eastern Pennsylvania.
Gallagher, who joined the firm in 1998, went into Glenmede’s Wilmington, Delaware, office on the Friday before Labor Day weekend, when he knew few if any employees would be present, to drop off a letter announcing his immediate resignation, despite a requirement that he give 21 days’ notice as a vice president, the suit alleges.
When a Glenmede human resources representative contacted Gallagher, he said “he did not have any new position lined up and that he was taking time off to relax. Glenmede quickly learned this was untrue,” the suit alleges.
“Indeed, within at most a few days of resigning from Glenmede, Gallagher commenced employment with the wealth planning team at Advisors Capital Management,” or ACM, according to the lawsuit.
On the day he resigned, Gallagher started soliciting Glenmede clients in violation of a non-solicitation and confidentiality agreement that requires him to refrain from soliciting clients and employees for 24 months following his resignation, and from retaining, disclosing or using confidential information and trade secrets after his employment, the firm contends.
Gallagher has urged over 10 clients to transfer funds to his new firm and two have said they plan to do so, according to the lawsuit.
Moreover, an agreement covering stock options Gallagher received in 2002 included similar confidentiality and non-solicitation restrictions, the complaint contends.
Gallagher continues to solicit Glenmede clients despite receiving a cease-and-desist letter, according to the lawsuit.
On Aug. 30, the day he resigned, Gallagher called and emailed a Glenmede client, informed the client he had resigned and would be joining, or already had joined, ACM, touted ACM’s benefits relative to Glenmede, and sent the client paperwork to begin the transfer process, Glenmede alleges.
