A Seattle-based financial advisor has been ordered by a FINRA arbitration panel to pay $450,000 to a former colleague, a ruling that underscores the growing frequency of disputes between advisors within the same practice. The award, made public on Monday, directed Erin Cannell, a veteran Ameriprise advisor, to pay $150,000 in damages and $300,000 in legal fees to Andre Selfa, who left Ameriprise in 2021 to join independent broker-dealer Securities America Inc., now known as Osaic Wealth Inc.
The case, which was heard by a three-person panel under FINRA Dispute Resolution Services, centered on control and access to clients. Cannell had sued Selfa and another advisor, Austin Scott, in 2022, alleging breach of contract, misappropriation of trade secrets, and other claims. The two advisors had been employed by Cannell's firm, Heritage Wealth Advisors, before departing. The panel's decision, however, went against Cannell, who was the claimant in the arbitration.
According to the arbitration award, the dispute arose from the resignation of Selfa and Scott from Heritage Wealth. The two advisors denied the allegations, and the panel ultimately sided with them on the claims brought by Cannell. The award did not specify the exact nature of the trade secrets or proprietary information allegedly misappropriated, but industry experts say such disputes are becoming more common as advisors move between firms and take client relationships and intellectual property with them.
“I’m seeing more disputes like this between advisors and other advisors at the same practice,” said Sander Ressler, managing director of Essential Edge Compliance Outsourcing Services. “What happens is not only do financial advisors leave but in some instances they may take proprietary information with them, and that could be investment models, research or proprietary algorithms.” Ressler added that such information is often the “secret sauce” that differentiates a firm, making these conflicts about more than just client lists.
The case also involved a separate legal action against Scott, who left Ameriprise in 2022. Heritage Wealth obtained an injunction in state court against Scott, and he was not part of the FINRA panel's final ruling. The injunction suggests that the firm was able to secure some relief in state court, even as the arbitration went against Cannell.
Legal experts note that FINRA arbitration awards are binding and can include significant financial penalties, as seen here. The $450,000 total includes both damages and legal fees, a substantial sum that reflects the seriousness of the allegations and the cost of defending against them. The case highlights the risks advisors face when they move between firms, particularly when they take client information or proprietary models with them.
For advisors and firms, the ruling serves as a reminder of the importance of clear agreements regarding client ownership and the handling of confidential information. As the industry continues to see high levels of advisor movement, disputes like this one are likely to remain a feature of the regulatory landscape. The case also illustrates the role of FINRA's arbitration process in resolving such conflicts, which can be faster and less public than court litigation.
In the broader context, the dispute reflects a trend noted by compliance experts: as firms invest in proprietary tools and models, the value of that intellectual property increases, making it a flashpoint in advisor departures. The outcome in Seattle may prompt other firms to review their own protocols for protecting client relationships and trade secrets, and to ensure that advisors understand the consequences of taking such information to a new employer.
