Glenmede Sues Longtime Portfolio Manager Over Surprise Resignation

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.

Another client informed Glenmede that on Labor Day, Gallagher contacted them to directly solicit the client to transfer all accounts to Gallagher’s new employer, the firm contends.

“To date, more than 10 clients have informed Glenmede that Gallagher solicited them, including two clients who have expressed their intent to follow him to ACM.

“Gallagher’s ability to immediately and efficiently target Glenmede’s clients for solicitation following his surprise resignation suggests the strong likelihood that Gallagher retained, in one form or another, Glenmede’s trade secret client data,” the firm contends.

And because he worked with Glenmede’s clients for many years, Gallagher “no doubt has committed substantial portions of Glenmede’s client list and client information to memory,” the suit says, arguing his using confidential client information to solicit clients for a competitor “constitutes misuse and misappropriation of trade secrets.”

Glenmede, which accuses Gallagher of breach of contract and misappropriation and misuse of trade secrets, asked the court for a temporary restraining order and preliminary injunction barring him from soliciting Glenmede clients and employees, and to return or delete any confidential client information he may have.

The firm also seeks compensation for damages.

Gallagher didn’t immediately respond to an email sent to his work address Monday.

ACM’s website describes him as a senior wealth advisor.

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