The Wall Street Journal is reporting that Wilmington Trust Corp. filed a lawsuit Friday against three former vice presidents who defected to a rival firm in advance of Wilmington Trust's acquisition by M&T Bank Corp.
In a complaint filed in Delaware Chancery Court, Wilmington Trust alleges that the three former executives conspired to misappropriate confidential business information that could be used by their new employer, Citi Private Bank.
The complaint also alleges that the former executives recruited former colleagues in Wilmington Trust's Wealth Advisory Services group to leave the company and join them in the Philadelphia office of Citi Private Bank, part of Citigroup Inc.
Named as defendants in the lawsuit are former Wilmington Trust vice presidents Barbara L. McCollum, Robert D. Rosenberg and Paul T. Gordon.
Wilmington Trust is seeking temporary restraining orders preventing its former executives from working for Citi, from soliciting former WTC clients, and from divulging any trade secrets.
The company also is seeking the return of any confidential information they may possess.
According to the complaint, the three defendants worked on a Wealth Advisory Services team, led by McCollum, that served high-net worth clients in Delaware and Pennsylvania. All three allegedly had access to confidential client and company information, and had signed confidentiality agreements.
The lawsuit alleges that the defendants began talking with Citi about possible job opportunities in January, about two months after Wilmington Trust, reeling from huge losses in its real estate loan portfolio, agreed to be bought by Buffalo, N.Y.-based M&T Bank for about $351 million. The deal is expected to close this month.
The Wealth Advisory Services 'branch was a major catalyst driving M&T's decision to partner with WTC," the lawsuit states, adding that the defendants were privy to confidential terms of the merger related to the WAS unit.
After accepting jobs with Citi but while still employed by Wilmington Trust, the three executives allegedly arranged a "secret meeting" with other employees of the WAS group on March 14 at the Wilmington Club, encouraging them to leave Wilmington Trust and subsequently arranging for them to meet with representatives of Citi.
According to the lawsuit, the defendants persuaded several other WTC employees, including Jennifer Phillips and Timothy Carroll, to accept jobs with Citi, which announced the hiring of Phillips, Carroll and the three defendants on Wednesday.
In addition to helping recruit other Wilmington Trust employees for Citi, the lawsuit alleges that McCollum last week accessed her Wilmington Trust computer and tried to email the entire financial database for clients of her team in the Wealth Advisory Services group to another email account.
Rosenberg, meanwhile, is accused of having an assistant provide him a document containing WAS client information, then taking it with him when he and the other Wilmington Trust employees resigned on Monday.
After resigning, the defendants allegedly tried to persuade Wilmington Trust clients to move their accounts to Citi, making false and misleading statements about the upcoming merger with M&T and implying that the accounts were at risk if they stayed with Wilmington Trust.
Folks, employee defection cases are about the story that can be told about the defection. We'll keep an eye on this one as the story develops.