A North Carolina court has invalidated key restrictive covenants in a wealth management firm's employment agreement, ruling that both the non-compete and non-solicitation clauses were overly broad and unenforceable. The decision, issued June 9, 2026, by Chief Business Court Judge Michael L. Robinson, came at the pleading stage, before any factual discovery had occurred.
The case involved Greensboro-based Matt Logan, Inc., operating as TMRW Wealth, and former financial planner Benjamin Abitz. According to the court order, the firm was preparing to transition its broker-dealer relationship from Cetera to Kestra, with the switch projected for October 2025. Abitz participated in attorney-client meetings about the transition, then resigned on October 6, 2025, the day before the change was to take effect. The firm alleged that on transition day, Abitz contacted its clients, implying the firm was no longer offering advisory services. Three days later, an email was sent to clients on behalf of Abax Capital, LLC, a new entity Abitz had formed, stating it would remain with Cetera.
TMRW Wealth sued for breach of contract, misappropriation of trade secrets, unfair and deceptive trade practices, and sought injunctive relief. Abitz moved to dismiss most claims. The court focused on the restrictive covenants, finding the non-solicitation clause prohibited Abitz from inducing "any person or persons to discontinue doing business with the Company." Under North Carolina law, such clauses must be limited to clients the employee actually served or had contact with during employment. Because the clause covered all firm clients, the court deemed it unreasonable and dismissed the claim with prejudice.
The non-compete clause fared no better. It barred Abitz from performing "any services in competition" within Guilford County for one year after termination. The court interpreted this as restricting any role at a competitor, even unrelated to financial planning. North Carolina precedent treats such breadth as fatal. The firm argued the clause should be read to apply only to identical roles, but the judge rejected that, stating the plain language could not be rewritten after the fact. The claim was dismissed with prejudice.
The trade secrets claim was dismissed without prejudice, allowing the firm to replead. The court found the firm described its alleged secrets only in broad terms—"confidential client information" and business details about the broker-dealer transition—without sufficient specificity to put Abitz on notice of what he was accused of taking. Two claims survived: the unfair and deceptive trade practices claim, tied to an unchallenged computer trespass allegation, and the breach claim related to the agreement's nondisclosure provision, which was not part of the motion.
For compliance teams and HR leaders at wealth management firms, the ruling offers clear lessons. Non-solicitation clauses must be tied to clients the employee actually worked with, not the entire client base. Non-competes need language limiting restrictions to the specific services the employee performed, not any work at any competitor. Trade secret claims require detailed descriptions from the outset; vague references to "confidential information" will not survive a motion to dismiss in North Carolina, and likely in many other jurisdictions.
The case also highlights the risks during broker-dealer transitions, a common event in the industry. As firms like TMRW Wealth navigate such changes, they must ensure employment agreements are drafted with precision to withstand legal scrutiny. For advisors considering moves, the ruling reinforces the importance of understanding the scope of any restrictive covenants they sign.
