Sanctuary Wealth and EverNest Financial Advisors jointly agreed to dismiss an ongoing lawsuit between the two firms, ending a year-long legal scuffle.
According to the Jan. 2 filing in Indiana Commercial Court, attorneys for both firms revealed that the parties had agreed to dismiss the claims “with prejudice” (meaning the case is permanently dismissed and cannot be revived) and cover their own legal costs. Judge Christina Klineman granted the motion to dismiss the same day.
EverNest’s lawsuit stemmed from its attempt to buy back a management interest Sanctuary took in the former firm after FINRA penalized a Sanctuary subsidiary.
In 2022, Sanctuary purchased a 20% membership interest in EverNest, but the deal included an option to buy back Sanctuary’s stake in the firm if a “triggering event” occurred. That September, FINRA fined Sanctuary’s broker/dealer subsidiary for selling risky private placement offerings; the firm agreed to pay $60,000, according to the settlement letter.
However, the settlement unnerved EverNest, and the firm’s managing partner, Frank Esposito, approached Sanctuary about buying back its stake. The parties moved forward on a call-right process, with EverNest planning to buy back Sanctuary’s share at 80% of the valuation.
But Sanctuary balked when it received an appraiser’s report indicating the buyback price might be too low; EverNest responded by filing a lawsuit earlier in 2024.
In a subsequent decision, Judge Klineman agreed that EverNest was within its rights to buy back Sanctuary’s membership interest after the FINRA settlement. However, the judge decided a trial would be necessary to determine if Sanctuary was right to halt the buyback if it determined the valuation was wrong.
A Sanctuary spokesperson confirmed that the lawsuit “and all related disputes” had been resolved “by mutual agreement” but had no further comment. Sanctuary declined to comment on questions about whether the settlement meant the firm would be divesting from EverNest. EverNest did responded to a request for comment prior to publication.
A trial scheduled to begin next June was canceled in light of the dismissal.