2plan CEO in court over 'broken promises' to IFA

Chris Smallwood, CEO of 2plan Wealth Management, was forced to defend himself against allegations of fraudulent misrepresentation in a Leeds court yesterday.

Peter Trotman, former managing director of Source Financial, claims Smallwood promised him a place on the 2plan board when the national IFA acquired his business in 2009, but later reneged on the deal.

In exchange for directorship, Trotman, who is seeking £500,000 in damages, says 2plan secured the transfer of about 40 Source advisers.

2plan is also suing Trotman for £100,000 over his alleged failure to comply with contract obligations following the acquisition. The cases are being heard at the same time.

Smallwood was the first to face questions in Leeds Combined Court yesterday over whether he had promised Trotman a place on the 2plan board.

Trotman produced emails and a mobile phone containing text messages which he claims proves such an agreement was in place.

One of the texts from Smallwood to Trotman, dated 17 March, stated: 'Good to hear you had spoken to Chris (Davies, 2plan director), he said you spoke of not enough in it for you. If we can hit the pound notes and get you onto the board will that do it for you?'

Another text read: 'I know you're up against it but all stops out this end. You have my word. I promise we will sort it.'

When presented with the phone in court, Smallwood admitted he had sent the texts, but denied they referred to an offer of a directorship.

He told the court: "I am referring to what happened that day, which was to send the outline proposal (of the deal to Trotman)."

However, earlier in the hearing, Smallwood admitted he told a meeting of Source IFAs ahead of the takeover that he did "intend" to offer Trotman a directorship.

Trotman's legal team claims the offer was made alongside a promise Trotman would continue to be involved with his advisers in a bid to encourage any of those wavering to join 2plan. 

In morning evidence yesterday, Mr Higginson, counsel for Trotman, said his client had been offered a directorship and had accepted.

Smallwood replied: "Yes, and the conversations were in conjunction with what have been set out in the outline proposal." The outline proposal refers to the outline business proposal between Smallwood as 2plan CEO and Trotman as Source MD.

Under cross examination, Smallwood later said he believed he announced at the meeting with Source IFAs that he "intended" for Trotman to be made a 2plan director, before adding, "but I could be wrong".

However, he said he had not included this information in his witness statement before the court hearing.

The case continues...