Creative, Mallouk, Schwab and Fidelity win referral lawsuit
A lawsuit filed against Creative Planning, its founder Peter Mallouk and the industry’s largest custodians failed to pass muster in federal court — at least for now.
U.S. District Judge LaShonda Hunt dismissed the case citing a lack of evidence and specificity in
The claims in Greco’s 15-count complaint included conspiracy, breach of contract and unjust enrichment, among others. He accused the firms of “wide-ranging unfair and anticompetitive practices and schemes” and an attempt to “to silence Greco and retaliate” by interfering with the business of the registered investment advisory firm he launched after leaving Creative Planning in 2017, Oakbrook Terrace, Illinois-based Spotlight Asset Group, Hunt noted in the ruling. The complaint placed the referrals that Schwab and Fidelity supply at a high cost exclusively to some of the largest RIAs at the center of its case against Creative and the custodians.
The ruling earlier this month provided Greco with the opportunity to file an amended complaint by the end of next week. Regardless, Hunt’s court order took the plaintiffs to task for “an overlong and needlessly complex” complaint and missing answers and details relating to Greco’s accusations of a conspiracy
READ MORE:
For example, the notion that
“Plaintiffs’ allegations in this regard are categorical and lacking in detail but also substantively deficient. Many of the purported motives to conspire (e.g., increased profits, competitive advantage, increase revenue, etc.), boil down to their motivation to increase profits, which always exists and does not give rise to an inference of a conspiracy,” she said.
“The bottom line is that the allegations of conspiracy are heavy on theories and labels and light on details,” Hunt said. “Furthermore, even reading the conspiracy-based claims in the light most favorable to plaintiffs, they lack adequate factual content about Defendants’ conduct to infer the existence of any agreement to engage in the schemes alleged by plaintiffs.”
Greco and his attorneys didn’t respond to an email seeking comment on the judge’s order and the plaintiffs’ plans for any future appeals or complaints. He had filed the federal case in May 2022.
READ MORE:
Representatives for Creative Planning declined to comment on the ruling. The company is “gratified with the court’s decision as we believe she dismissed claims that are meritless and we intend to vigorously defend against any further action from Greco,” Creative attorney Adam Wolfson told industry publication
While many financial advisors and competitors
“The court will first review any proposed amended complaint filed by that date and enter an appropriate order,” Hunt wrote.
link