Subscriber login

Business
What you need to know for 07/24/2017

Key suing 3 former employees

Key suing 3 former employees

KeyBank is suing three former investment advisers who allegedly engaged in a “calculated poaching sc

KeyBank is suing three former investment advisers who allegedly engaged in a “calculated poaching scheme” that netted at least 50 accounts valued at $16 million for their new employer, competitor Principal Financial Group.

The lawsuit, filed last week in state Supreme Court in Albany County, seeks $1 million in compensatory damages and $1 million in punitive damages on counts that allege misappropriation of trade secrets, conversion, unfair competition and unjust enrichment.

Key also wants a temporary restraining order and permanent injunction that bar the trio and Principal from continuing “wrongful conduct [that] is causing substantial and irreparable harm to Key and its existing customers,” according to the lawsuit.

Named as defendants along with Principal are Scott Powhida, Lawrence Dillon and Victoria Amyot, whom Key calls “three former faithless employees.” The lawsuit claims the three abruptly resigned on the afternoon of March 31, and on April 1 opened a new office in Latham for Principal, a Des Moines-based firm offering investment, retirement and asset-management services.

Powhida and Dillon are described as longtime employees of Key Investment Services, an affiliate of KeyBank that offers financial and investment products and services. Amyot, a more recent hire, is called Powhida’s “junior financial adviser.” Powhida and Amyot worked out of Key’s branch on Consaul Road in Niskayuna, according to the lawsuit. Dillon’s office was in the Key branch on Second Street in Rensselaer.

All three are so-called Series 7 general securities representatives, meaning they are registered brokers who can buy and sell stock. They also are licensed as insurance and investment advisers.

The lawsuit claims the trio and Principal “together conspired to establish a new competing investment and financial services office by using Key’s confidential information and ‘cherry picking’ Key’s most lucrative accounts and clients.” As of April 17, according to the complaint, 50 Key accounts valued at $16.08 million had transferred to Principal.

Key contends Powhida, Dillon and Amyot solicited business for Principal while they still worked for Key, which constituted “blatant violations” of their employment and trade secrets contracts, as well as the company’s code of ethics.

“Trade secrets” include confidential and proprietary information that gives Key “a competitive advantage in its business,” according to the lawsuit.

The complaint alleges Principal “was complicit in and aided and abetted this premeditated scheme … either by actively approving and participating in this unlawful conduct, or by failing to adequately supervise and prevent the unlawful conduct” of Powhida, Dillon and Amyot.

A spokeswoman for Principal could not be reached for comment Monday.

Key, after hearing from clients, says it sent “cease and desist” letters on April 1 to the three and to Principal that reiterated the trio owed contractual obligations to Key that included not soliciting its clients.

Soon after, Key’s attorney, Andrew Karamouzis of Moran Karamouzis in Rockville Centre, Long Island, reached out to Salvatore Ferlazzo of Girvin & Ferlazzo in Albany, who represents the trio, “in a good faith effort to amicably resolve these matters without litigation,” according to the complaint.

The lawyers talked by phone and email during a weeklong “stand down” period under which Key agreed not to file suit and the trio refrained from contacting Key customers, according to the complaint. But that turned out to be a ruse, the complaint says.

“Regrettably, rather than negotiate in good faith, the Powhida Group took undue advantage of Key’s offer to negotiate as an opportunity for additional time to ramp up its solicitation of Key customers,” the lawsuit contends.

Ferlazzo declined comment on the lawsuit Monday.

Key seeks to have the defendants permanently barred from using any trade secrets gleaned by the trio from their time at Key. It also wants them blocked from contacting Key clients for a period of one year from April 1, or from encouraging other employees to bolt Key for a period of one year from April 1.

View Comments
Hide Comments
0 premium 1 premium 2 premium 3 premium 4 premium 5 premium 6 premium 7 premium article articles remaining SUBSCRIBE TODAY

You have reached your monthly premium content limit.

Continue to enjoy Daily Gazette premium content by becoming a subscriber.
Already a subscriber? Log In