Edelman Financial Engines and Prime Capital Financial have resolved their legal dispute over alleged advisor poaching and client data theft, agreeing to a permanent injunction that will govern future advisor moves between the two registered investment advisers. The settlement, filed August 4, 2026, in the U.S. District Court for the District of Delaware, is conditioned on the court entering the injunction, after which the parties will file a stipulation of dismissal.
Edelman, which manages nearly $330 billion in client assets, filed suit in November 2025, accusing Kansas-based Prime Capital of using a “playbook” to recruit a dozen of its advisors and misappropriate confidential client information tied to $1.5 billion in assets. The case had already produced a temporary restraining order in March that barred two Prime advisors from soliciting clients they had served while at Edelman. Prime Capital, which oversees about $40 billion, said in a statement that the matter, including all underlying cases, had been “resolved to our satisfaction.”
Transition protocol
The injunction establishes a detailed process for any Edelman financial planner who leaves to join Prime Capital. The departing advisor must provide written resignation notice to both their Edelman regional director and the firm’s human resources department at least 14 business days before their final day of employment. During that period, the advisor remains bound by all contractual obligations to Edelman, including confidentiality and non-solicitation duties.
Edelman retains broad discretion to manage the transition period, including placing the advisor on leave, restricting system access, or reassigning client accounts. The injunction also requires Edelman to send a joint client notice to each affected client no more than seven business days before the departure date, with Prime Capital reimbursing Edelman for the cost of overnight mailing.
Non-solicitation and carve-outs
For 12 months after departure, the advisor is barred from soliciting or initiating contact with former Edelman clients through any channel—phone, email, text, social media, or third parties. Prime Capital is prohibited from encouraging, facilitating, or acquiescing in such contact and must ensure that advisors who join comply with these obligations.
The settlement includes carve-outs for family members of departing advisors and for advisors whose principal office, client base, and tax residence were all in California during the 12 months before resignation, reflecting that state’s restrictions on non-compete enforcement. The Delaware court will retain jurisdiction to enforce the injunction.
Industry impact
Max Schatzow, a partner at RIA Lawyers, noted that the injunction is binding only on the two firms and does not create a generally applicable hiring protocol. “The settlement is interesting, but it does not establish any meaningful legal precedent and is unlikely to affect how firms recruit advisors, how advisors depart RIAs, or how attorneys counsel their clients,” he said.
Schatzow pointed out that the Broker Protocol already provides a framework for advisor transitions at both RIAs and broker-dealers. He advised firms to independently review employment agreements, prohibit the use of confidential information, and avoid conduct that could support a tortious interference claim. The settlement comes amid heightened scrutiny of advisor recruiting practices, with other firms facing similar litigation. For example, Britannica Capital’s trade-secret claim against Jefferies and Goldman highlights the stakes. Meanwhile, the RIA M&A market remains active, as seen in Wealth Enhancement’s acquisition of Miramar Capital.
