RIA claims custodian violates his trademark

Through successful fundraising, acquisitions and a marketing campaign to lure financial advisors put off by the pending Charles Schwab-TD Ameritrade mega-merger, Altruist has established itself as a significant player on the asset custody market with ambitions to grow even larger.

But it may have to do so under a new name.

Eric Haas, owner of Altruist Financial Advisors — a Holland, Michigan-based registered investment advisor with $250 million in assets under management, according the firm’s most recently filed Form ADV — sued the Los Angeles-based company for infringing on his company’s trademarked name.

The case is currently in discovery and moving forward unimpeded after a February decision from U.S. District Judge Jane Beckering in Grand Rapids, Michigan to deny the defendant’s motion to throw out related claims of counterfeiting and cybersquatting. Court-ordered mediation is scheduled for October.

“The use of the mark by defendants is identical to the registered mark ‘Altruist’ letter for letter,” Judge Beckering said, according to Law360.

Haas is seeking an order that prohibits the Los Angeles-based company from using the Altruist name, gives him ownership of the altruist.com domain name, and delivers compensation for profits made from the violated trademark.  

“Nobody wants to go to trial, ever. It’s just awful for everybody; it’s expensive for everybody,” Haas told InvestmentNews. “I would like to settle this in a mutually beneficial fashion. However, the other side has decided that they didn’t want to do that.”

Haas launched his Altruist in 2001 and in 2003 received a trademark for the name, covering “financial analysis and consultation; financial management; financial planning; financial portfolio management; investment advice; investment consultation; investment management; investment of funds for others,” according to court documents. Haas originally filed for the trademark out of concern that a Hong Kong-based company, Altruist Financial Group, could create trouble for his firm if it ever expanded into the U.S.

The defendant Altruist Corp. was launched in 2018 by CEO Jason Wenk and is the parent company of both Altruist LLC, an RIA, and Altruist Financial LLC, an introducing broker-dealer. The company pitches itself as a digital custodian built specifically for independent financial advisors and has raised a total of $290 million in funding from investors including Venrock, former Vanguard CEO William McNabb (who recently joined Venrock as an advisor), Insight Partners and Adams Street Partners. Adams Street could not be reached for a comment, the other investors did not respond InvestmentNews’ requests.  

In March, Wenk’s Altruist severed ties with Apex Fintech Solutions in favor of a self-built custody and clearing platform and acquired Shareholders Service Group. The deal added 1,600 RIAs to the platform and pushed the total number of firms it serves past 3,000, the third highest total in the industry behind Fidelity Institutional and Schwab Advisor Services.

“Our company respects intellectual property rights and has no desire for marketplace confusion,” a spokesperson for the defendant Altruist said in a statement. The company declined multiple requests for additional comment.  

Haas first heard about the California-based Altruist in 2019, when Wenk sent an email introducing himself and the company with the subject line, “License of your trademark.” After Haas responded that he would prefer Wenk not infringe upon the trademark, Wenk then asked for a phone call with legal counsel to discuss the issue, according to emails reviewed by InvestmentNews.

“We aren’t and would not infringe,” Wenk wrote in 2019. “My company is not a financial advisor or investment advisory business. It’s a technology company that caters to financial advisors.”

Haas declined to take the call — “I didn’t see anything to be gained from that,” he said — and forgot about the exchange for two years. But after reading about the growing company in wealth management trade publications and fielding calls from people interested in learning more about the wrong Altruist, Haas wrote an email asking Altruist to stop using the name.

While several firms have tried to use the name “Altruist” over the years, all but two agreed to change their names after an email exchange, Haas said. One that initially resisted eventually decided to change its name to AltruVista Wealth Management to avoid a costly court battle.

“Everybody else has done the right thing, which is to not violate the law,” Haas said.

Wenk’s company has indicated that it intends to fight the case.

“We have reviewed the allegations in the trademark lawsuit filed in Michigan and believe they are without merit,” the spokesperson for the defendant Altruist said. “We plan to defend our position vigorously, and we look forward to resolution of the plaintiff’s claims.”

The company name has caused significant confusion in the market, according to Haas. He claims he has tracked 37 instances of confusion, including clients who custody money with the defendant Altruist who have called the plaintiff to request an account withdrawal, and another who wanted help making an IRA contribution before the April deadline. Haas has also received calls from other RIAs who are interested in changing custodians or are looking for assistance with the onboarding process, and from mutual fund companies calling about products purchased by the other firm.

Despite the early decision from the judge going in his favor, Haas is worried about his ability to match the competing Altruist when it come to the resources to afford a lengthy legal battle.

“The first time I hired an attorney to help me defend against [a trademark infringement], the attorney told me that the way these things usually go is the one who is willing to spend the most money usually ends up prevailing,” Haas said. “That’s not a good thing to hear, especially in this situation where I am. It’s a true David and Goliath situation. It’s not good. Shame on them for behaving so poorly.”

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