Firm’s principals sued over trade secrets
Cadence Bank subsidiary claims Precedent caused it to lose more than $350M in assets
A fledgling San Antonio wealth management firm and its founders — two brothers — are facing accusations that they stole trade secrets from their former employer to solicit and obtain its customers’ business.
Cadence Bank and its investment advisory unit, Linscomb Wealth, both of Houston, allege in a lawsuit that San Antonio’s Precedent Wealth Partners and brothers J. Harold Williams and George Williams “implemented a blitzkrieg strategy to abruptly resign” from Linscomb, start a competing firm and service “the same customers they personally serviced at Linscomb.”
The defendants’ “unlawful conduct” resulted in a loss to Linscomb of more than $350 million of assets under management, which the complaint says is believed to have transferred to Precedent.
Cadence and Linscomb say the Williams brothers have been “unjustly enriched” through breaches of fiduciary duties and should be ordered to turn over all their financial gains, including salaries, bonuses, incentives and benefits. The plaintiffs also seek unspecified actual and punitive damages as well as damages for the alleged harm caused.
The lawsuit was filed Wednesday in federal court in San Antonio, the same day Cadence and Linscomb dropped a similar action they had filed in May in state District Court in Harris County against the two brothers. Precedent was not named as a defendant in the earlier suit.
Scott Newar, a Houston lawyer representing the Williams brothers, said in an email Wednesday that two different state court judges in the Houston case “rejected Cadence’s meritless claims.”
“Unfortunately, rather than end its long-running vendetta against the Williams brothers, Cadence has opted to forum shop by filing a new lawsuit in San Antonio federal court,” Newar said. “We trust the federal court will likewise reject Cadence’s meritless claims.”
In their lawsuit, Cadence and Linscomb cited the state court
judge’s “busy docket,” discovery “roadblocks” created by the defendants and “the exigent circumstances” in the case for dropping the earlier lawsuit. A lawyer for the plaintiffs did not respond to a request for comment.
‘Spite, vengeance, greed’
In a May court filing there, the brothers responded that Cadence and Linscomb were acting out of “spite, vengeance, greed — or all three” in seeking to “punish two elderly, long-term employees … for leaving their employment as investment advisors after a combined 95 years and striking out on their own.”
George Williams, 76, and Dan Linscomb teamed up to form Linscomb & Williams Inc. 50 years ago. Harold Williams, 71, joined the firm two years later and became chairman and CEO in 2010.
Houston’s Encore Bancshares Inc. acquired Linscomb & Williams in 2005 but allows the firm to operate as an independent subsidiary.
In 2012, Cadence acquired Encore and with it, Linscomb & Williams. Nine years later, Cadence merged into Bancorpsouth Bank but continued to operate as Cadence — with its corporate headquarters in Houston.
The Williams brothers alleged in their May filing that Cadence’s new owners began interfering with Linscomb & Williams’ dayto-day operations and curtailing Harold Williams’ authority and responsibility. As a result, they say, he decided to relinquish his position as CEO in 2022.
The brothers added that they became “increasingly disillusioned” and decided to leave Cadence and Linscomb & Williams to become independent registered investment advisers.
The pair submitted their resignations on April 14 — without notice, Cadence and Linscomb allege. A week later, they opened Precedent. Court documents indicate San Antonio is Precedent’s principal place of business, but its website says its headquarters is in Houston.
“We launched Precedent Wealth Partners largely because we want to partner with our clients by creating an advisory entity that cannot easily be sold,” Harold Williams said in an April 26 press release. “We want our clients to feel they can count on our permanence and alignment with them.”
The Williamses say in their court filing that they have not solicited any any former clients. The firm dropped “Williams” from its name and became Linscomb Wealth in January.
‘Project Astros’
In their latest lawsuit, Cadence and Linscomb allege the Williams brothers plotted their resignations and launch of Precedent as early as October 2022.
Before they left, the brothers and Harold Williams’ son Grant Williams conducted meetings “inconspicuously dubbed ‘Project Astros’ or the ‘three Amigos,’ ” based on files listed on one of Harold Williams’ flash drives, according to the complaint. Grant Williams — who also is a Precedent founder — is not a defendant, though he was in the Houston lawsuit.
The suit adds that Harold Williams has given Linscomb notice on behalf of 92 households that he and his brother serviced at Linscomb that are now receiving financial services at Precedent. The plaintiffs accuse the brothers of breaching noncompete and customer nonsolicitation covenants in their employment agreements.
A September filing with the Securities and Exchange Commission shows Precedent had about $221 million in assets under management in 183 accounts. The firm reported having 45 clients.
Linscomb had $4.3 billion of assets under management as of Dec. 31.