Creative Planning, a large financial planning firm with over $210 billion in assets under management, has faced several lawsuits in recent years, involving various legal issues:
Non-Compete Clauses:
- Four former employees sued Creative Planning in 2023, claiming that the non-compete clauses in their employment contracts were unenforceable. The plaintiffs argued that the clauses were overly broad and geographically restrictive, preventing them from working in the financial services industry for a period of two years after leaving Creative Planning. This case is ongoing and could have significant implications for the use of non-compete clauses in the financial services industry.
- In a separate case, a former Creative Planning advisor challenged a non-compete clause in his employment contract. The advisor argued that the clause was unreasonable and prevented him from earning a living in his chosen field. This case settled out of court, with the terms of the settlement confidential.
Investment Losses:
- In 2023, a client of Creative Planning sued the firm for allegedly causing him to lose $9.5 million in options trading. The client claimed that Creative Planning and its advisors engaged in negligent and reckless trading practices that resulted in the significant losses. This case is ongoing, and the judge has not yet ruled on the merits of the claims.
- Another client filed a lawsuit against Creative Planning in 2021, alleging that the firm failed to adequately supervise his account. The client claimed that Creative Planning allowed him to make risky investments that were not suitable for his financial situation. This case also remains unresolved.
Other Legal Issues:
- Creative Planning has also been involved in lawsuits related to alleged violations of the Securities and Exchange Commission’s (SEC) regulations. The SEC has accused the firm of failing to disclose conflicts of interest and engaging in misleading marketing practices. These cases have resulted in settlements between Creative Planning and the SEC, without any admission of wrongdoing by the firm.
Impact and Future Outlook:
The lawsuits facing Creative Planning have raised concerns about the firm’s business practices and its compliance with legal and ethical standards. These legal challenges have the potential to damage the firm’s reputation and lead to financial losses. To mitigate these risks, Creative Planning will need to carefully review its internal practices and ensure that its advisors comply with all applicable laws and regulations.
It is important to note that the information presented here is based on publicly available sources and may not be exhaustive. The legal landscape is complex and constantly evolving. For a comprehensive understanding of these issues, it’s crucial to consult with legal professionals and experts in the field.
Disclaimer:
This article provides a general overview of the Creative Planning lawsuits and should not be interpreted as legal advice. If you have any questions about Creative Planning or its legal issues, please consult with an attorney.
