RCS Capital and Cetera Financial allege Lightyear Capital poached senior officers

By Sheri Kasprzak

New York, Feb. 26 – RCS Capital Corp. and its subsidiary Cetera Financial Group, Inc. filed a lawsuit against competitor Lightyear Capital LLC Friday in the U.S. Bankruptcy Court for the District of Delaware, alleging the financial services firm poached senior officers and compromised Cetera’s retail business, potentially harming its restructuring efforts.

The suit also names former Cetera strategic operations senior vice president Cynthia A. Hamel and former chief marketing officer Susan S. Theder, accusing them of violating non-compete agreements when they left to work for Lightyear and brought others to the competing firm.

“This suit arises out of deliberate actions taken by Lightyear (a direct business competitor to CFG) to induce trusted and critically important senior officers of CFG to join Lightyear and provide it with instant access to, among other things, the company’s invaluable relationships with independent financial advisors that comprise the backbone of the debtors’ core asset, the retail business, which is the key component of the proposed restructuring,” said the suit.

“By its actions, Lightyear and its agents have deliberately and knowingly assisted Hamel and Theder to breach their agreements not to compete and Lightyear has flouted the express prohibitions against soliciting senior company employees and officers (such as Cynthia Hamel, Susan Theder and Ahmed Hassanein) set forth in the September 2015 non-disclosure agreement between Lightyear and RCS.”

These actions, the suit alleges, will cause irreparable harm to RCS and subsidiary Cetera’s retail business and “will imperil the proposed restructuring to the detriment of all creditors and stakeholders of the debtors.”

RCS, based in New York, is the parent company of current debtors, Cetera Financial Group, Inc., and other subsidiary and affiliated non-debtor retail broker/dealer and investment advisory companies. Cetera, based in El Segundo, Calif., is an investment advisory firm. RCS filed for bankruptcy on Jan. 31 under Chapter 11 case number 16-10223.

Lightyear is located in New York and is a private equity firm focused on investments in financial services companies.

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