Lawing Financial sues Cavner for contract breach

Nadia Cavner finds herself in another legal fight, this time facing a list of accusations from the company that bought the once-prominent financial adviser’s business last year.

According to a lawsuit filed by Overland Park, Kan.-based Lawing Financial Inc., Cavner is interfering with its operations and has illegally maintained relationships with her former clients. The suit seeks the $1 million the company has paid Cavner to date toward the purchase of her firm, Nadia Cavner Group, and for the court to draw the lines regarding contact with Lawing clients.

On April 15, Lawing Financial filed suit against Cavner in the southern division of the Western District of Missouri for breach of contract. The financial advisory firm purchased the Cavner Group in January 2014 by agreeing to pay $3 million spread out over five years. In the agreement, Cavner agreed to stay on with Lawing during a transition period, but not advise clients on financial matters, especially after authorities barred her from selling securities in late February 2014. The suit alleges Cavner continued to advise clients and told them at times to disregard Lawing’s financial recommendations. It also claims she opened an office across from the former Cavner Group space, had a former employee connect her with confidential client information and has harassed Lawing’s advisers and staff.

A longtime former client, however, says Cavner simply wants to help her friends and has no opportunity to gain financially from her client contact. Cavner declined Springfield Business Journal’s interview request, and no attorney is listed in the suit as representing Cavner.

The charges
Lawing Financial CEO Kerry Lawing said he didn’t want to sue, but he felt Cavner’s actions left the company no choice.

“You have somebody who has been disbarred, statutorily disqualified by (the Federal Industry Regulatory Authority), and then they rent an office across the street where she is watching who is coming and going, texting clients and calling staff members,” Lawing said.

Among the claims in the case, Lawing Financial clients in January instructed the firm to void any pending transactions, per Cavner’s advice. The same clients, who weren’t named in the suit, provided Cavner with “a large check” at her office.

“When Lawing retrieved the check from Cavner’s offices as the clients instructed, the envelope contained detailed investment instructions written by Cavner,” the filing states.

According to the suit, during sales negotiations between Cavner and Lawing Financial representatives, Cavner repeatedly indicated the business held roughly $400 million in assets under management and that she would do her best to “aid in the transfer of assets, including client relationships.” The filing claims Cavner misrepresented her book of business by roughly $160 million.

The buy-sell agreement included an 18-month noncompete clause with Lawing Financial and said Cavner would refrain from soliciting her former clients for 60 months, the filing states. Bound by a Heightened Supervisory Plan, Cavner was not to offer securities advice or affect a securities transaction in accordance with her FINRA disqualification. In addition, she was contractually prohibited from interacting with clients without a registered Lawing representative or from electronically accessing client information.

However, the suit claims Cavner did not act in good faith to fully transfer the client relationships, breached the terms of the HSP and intentionally interfered Lawing’s future business expectations and contractual relationships with clients and a former employee. Specifically, Lawing claims a former Cavner Group employee was “acting as an agent for Cavner under her direction and control.” The employee, who was not named in the suit, is accused of providing Cavner with confidential client information via a Web-based client-management system, which she checked more than 50 times over a period of months.

She opened an office around October across the street from her former suite and met with clients “on nearly a daily basis” to discuss their investments, according to Lawing officials often telling them to disregard Lawing employees’ advice. Once, she attempted to tell Lawing representatives to withdraw $250,000 from the account of one of her former “high-asset customers,” the suit claims.

Another time, after a customer met with Cavner and then met with a Lawing representative, Cavner is accused of texting the Lawing adviser, “Planning to KILL you!” allegedly because she was angry the representative asked the client about the communications. She also is said to have “repeatedly badgered” a Lawing adviser to go out on his own and suggested he would have opportunities with existing Lawing clients.  

“This whole thing doesn’t make sense. It’s not normal. A person doesn’t get disbarred and loses her licenses and is still interacting and meeting with people,” said Kerry Lawing, a 30-year financial veteran. “I’ve never even heard of anything like this.”

Lawing has operated a Springfield office since 2008 at 3271 E. Battlefield Road, Ste. 100, and recently moved its staff on Normandy back to the Battlefield Road site, according to its CEO, until it can determine a long-term office solution.      

Family affair
The need to sell the company stems from Cavner’s April 2013 guilty plea in federal court for intentions to injure, harass or intimidate her college-age daughter’s ex-boyfriend, Patrick McFarland. The following month, Cavner left BancorpSouth Inc. (NYSE: BXS), where she worked for eight years, and opened the Cavner Group, around the corner at 2620 E. Normandy St., Ste. 108.

In August 2013, Cavner was sentenced to five years of probation, six months of limited home detention and two years of community service. McFarland and his now-wife filed suit against Cavner in civil court two months later, seeking at least $500,000 through 20 charges. That case is still active.

Ron Herschend of Herschend Family Entertainment, owners of Silver Dollar City, said he’s maintained a friendship with Cavner, and the office she set up is for her philanthropic work.

“I know that for a fact. She’s working with Convoy of Hope and other nonprofits to help raise funds. She’s working with the Bradleyville school district on a project called the Pride Store,” Herschend said, adding he has seen her donate at least $50,000 to that project in recent months.

Herschend, a former Taney County commissioner, moved his finances over to Bank of Missouri last year when Cavner sold to Lawing Financial. He doesn’t believe Cavner has any incentive to harm Lawing’s business.

“She can’t trade for people. She can’t make money from trades,” he said, adding that to Cavner, clients were like family, even recommending a doctor when his wife was having heart problems. “She had clients for 20-plus years and for her to say, ‘No, I’ll never speak to you again. I won’t help you with your trust or estate planning. I won’t be there when you need me,’ that doesn’t make any sense.

“When someone contacts her that’s had a long-term relationship and they say, ‘I’ve been asked to invest in this or change this in my portfolio,’ she’s not benefitting in any way,” Herschend said.

In October, Herschend said his brother, Bruce, and Ron’s nephew planned to make an investment before the end of the year, so Herschend took them to Cavner for advice.

“She referred them to Lawing. So, if there is something she is doing wrong, why would she send (them) to open accounts?” he said.[[In-content Ad]]