FNZ has settled an acrimonious legal dispute with former leaders of its recently purchased US business, YieldX.
In a filing with a New York district court early in April, FNZ “voluntarily dismisses this proceeding without prejudice” against YieldX founders, Adam Green and Shlomo Gross.
The global platform provider sued Green and Gross at the beginning of 2024 over an alleged breach of loan agreements amounting to more than US$6.5 million in total after the pair resigned last November.
YieldX, a fixed income portfolio management software firm, was barely three years old before FNZ snapped up the business in January 2023 for more than US$80 million as part of its US expansion strategy.
Green and Gross were named FNZ North America asset management chief executive, and, head of asset management strategy, respectively, post purchase but quit 10 months later citing ‘good reason events’.
The pair tended almost identical resignation letters, released as evidence to the New York Southern District Court, claiming FNZ had “materially misstated its financial position and engaged in accounting improprieties that materially reduce” their prospects of an “annual cash bonus of up to [US]$500,000 for fiscal years 2023 through 2026 based on the Company’s achievement of at least 75% of the EBITDA targets”.
FNZ has only turned its attention to the US market in the last three or four years after strong growth in the UK, European, Asian and Australasian markets.
The group made its first serious tilt in the US in 2020 by taking a majority stake in the State Street ‘Wealth Manager Service’ (WMS) subsidiary.
At the time, FNZ chief, Adrian Durham, said: “This is the first step in a long-term strategy to expand our platform into the North American market. In the US, we see similar long-term drivers in relation to cost, transparency, digitization and personalization in asset and wealth management as other markets in which we operate.”
The WMS was formally transferred to the new FNZ Trust Company structure, headed by Lee Jones, in 2021 with State Street providing sub-custody services as well as retaining a minority stake in the venture.
FNZ, which recently refreshed its NZ executive ranks, reports global assets under administration of about US$1.5 trillion. The group company is officially headquartered in NZ following a change of corporate domicile in 2022.
In 2022 FNZ raised a further US$1.4 billion from new investors, the Canada Pension Plan and Motive Partners, in a deal that valued the business at US$20 billion. The firm also counts as shareholders another Canadian pension fund, Caisse de dépôt et placement du Québec (CPDQ), the Al Gore-founded Generation Investment Management, Singapore sovereign fund Temasek as well as private equity firms Motive Partners and Summit Partners. About 3,000 FNZ employees also have a stake in the business.
CPDQ owns almost 45 per cent of FNZ with a valuation of at least US$1.5 billion, according to the fund’s most recent financial statements.