Edelman Financial Engines and Prime Capital Settle Case
Edelman Financial Engines and Prime Capital Financial have agreed to settle an ongoing lawsuit between the firms, closing the book on a multi-year litigation battle.
As part of the settlement, Prime Capital has agreed to an injunction detailing procedures that the company and any Edelman planner who opts to leave for Prime Capital must take if they switch firms.
The tug-of-war between the firms began in 2024, when several former Edelman advisors sued to break non-solicitation agreements they’d signed with their former employer after joining Prime Capital.
Edelman responded with its own lawsuit against those reps and added Prime Capital as a defendant in early 2025. In the lawsuit involving former Edelman advisor Tim Dowden, the RIA accused Prime Capital of knowing about a scheme to take confidential client information and of urging advisors to encourage clients to move their business between firms.
According to an Edelman spokesperson, the firm was “pleased to have reached a resolution that reflects the importance of protecting client relationships and the confidential information entrusted to our business.”
Additionally, a Prime Capital spokesperson affirmed that the issues, “including all of the underlying cases between Prime Capital Financial Advisors and Edelman, have been resolved to our satisfaction, including a stipulated process for hiring in the future.”
In the original suits, Edelman claimed Prime Capital encouraged prospects to remain at Edelman to access client information, resign on a Friday (often before a holiday) via mail to an Edelman office thousands of miles away (allegedly buying Prime Capital and the departing Edelman planners time to solicit clients before Edelman learned of the resignations).
Earlier this year, Edelman filed for a restraining order, alleging that Prime Capital continued to poach Edelman planners and encouraged them to breach their employment contracts. In March, a federal court judge in Delaware granted the order, prohibiting the former Edelman advisors from using client information and soliciting firm clients.
In May, Edelman claimed that Prime Capital was not complying with the court-ordered restraining order. A federal judge then tightened the restrictions on Prime Capital, claiming the firm had “taken an act-first, ask-for-forgiveness-later approach” when hiring Edelman employees.
According to the injunction agreed to by both firms, any planner leaving Edelman for Prime Capital must send a resignation notice to their supervisor and a separate email stating they’ve complied with obligations to the firm, with the “transition period” between firms being no fewer than 14 business days.
“Prime Capital shall not, directly or indirectly, encourage, facilitate, induce, participate or acquiesce in any failure to deliver a conforming resignation notice or to observe the transition period, and shall not intentionally avoid knowledge to evade its obligations under this paragraph,” the motion read.
Prime Capital will reimburse Edelman’s costs of mailing written notices to clients informing them of a planner’s move to Prime Capital no more than seven days before the scheduled departure date, and must do so no longer than 14 days after Edelman sends a reimbursement request to a designated contact at Prime Capital.
The injunction bars Prime Capital from encouraging former Edelman advisors to solicit clients, and those planners are banned from doing so for a year following their departure from Edelman.
Additionally, as a condition of employment at Prime Capital, the firm must require that any former Edelman planner will “comply with his or her confidentiality obligations to Edelman before, during, and after the transition period, including by prohibiting such covered planner from taking, removing, retaining or disclosing any Edelman confidential information.”
The next step is for the court to enter the jointly agreed injunction, and the parties have pledged to file for dismissal after that is completed.
