Citizens Bank has sued a rival lender, alleging SoFi Bank induced Citizens’ Connecticut mortgage employees to violate nonsolicitation agreements and remove confidential customer information as part of a coordinated recruitment campaign.
Nine members of Citizens’ Connecticut mortgage operation resigned June 12 and joined SoFi, according to the federal lawsuit filed this week in New Haven. The group included a manager and loan officers responsible for more than $400 million in closed loans over the previous year.
Citizens alleges SoFi recruited 70% of its Connecticut mortgage producers, who had closed more than 80% of the bank’s Connecticut mortgages during the year before their departures.
The lawsuit does not contend that hiring a competitor’s employees is inherently unlawful. Rather, Citizens alleges SoFi encouraged former employees to breach contractual restrictions on soliciting co-workers and customers and to remove confidential information that could be used to compete for business.
The Rhode Island-based bank, a subsidiary of Citizens Financial Group Inc., alleges SoFi has hired more than 30 of its mortgage employees nationwide since August 2024. Citizens says the departures have “decimated” its Connecticut mortgage business and “essentially eliminated its market presence” in the state.
SoFi Bank, a national banking association headquartered in Cottonwood Heights, Utah, operates without physical branches. It markets mortgages and small-business loans to Connecticut customers online and employs mortgage staff in the state, according to the complaint.
A SoFi spokesperson rejected the allegations.
“This is a baseless allegation and a clever attempt to prevent Citizens employees from pursuing career opportunities elsewhere,” the spokesperson said. “We lawfully compete to recruit and retain the best talent and expect other organizations to do the same.”
SoFi said Citizens has produced no evidence that the company incentivized former Citizens employees to violate their contracts.
Employees who joined SoFi were instructed to honor their obligations to Citizens, the company said, and to refer any inbound inquiries from Citizens employees to SoFi’s talent acquisition team rather than engage with them. They remain barred from any role in recruiting candidates who currently work at Citizens, according to SoFi.
SoFi said it also required each new hire to represent that they had no conflicting obligations and would not use or disclose a prior employer’s confidential information.
In Connecticut, the dispute centers on mortgage market manager Michael Daversa and his team, who were among the June 12 departures. Daversa and one loan officer worked from Citizens’ Westport office, while other team members worked remotely, including a loan officer based in West Hartford.
Daversa told the bank he had “no idea” whether any colleagues were leaving with him, according to the complaint. Six members of his team resigned within the next 49 minutes.
Citizens claims the departures were coordinated to cause maximum disruption to its Connecticut mortgage operation. It alleges SoFi knew that the former employees had agreements containing confidentiality provisions and restrictions on soliciting Citizens employees and customers.
SoFi’s recruitment extended beyond Connecticut, Citizens alleges, citing departures from its mortgage operations in Arizona, Florida, Minnesota, New York, Pennsylvania, Tennessee, Texas and Virginia.
Citizens traces the alleged campaign to August 2024, when its executive vice president and head of consumer lending left the bank for a similar position at SoFi, according to the complaint.
Citizens also alleges former employees removed confidential information around the time of their resignations and that SoFi encouraged, obtained and used the information to compete for customers.
A forensic review found client lists sent to personal email accounts, a spreadsheet containing customer contacts and real estate agent referrals, an attempted upload of client data to a personal iCloud account, and a loan pipeline report printed on the day of the Connecticut resignations, according to the complaint.
The bank alleges the information included customer names, contact information, account numbers, loan amounts and rates, credit details, referral sources, pricing models and refinancing information.
Citizens says it sent cease-and-desist letters to the departing Connecticut employees but received no response from them or SoFi.
The 10-count lawsuit accuses SoFi of obtaining and using Citizens’ trade secrets without authorization, interfering with the bank’s employment contracts and customer relationships, and helping former employees violate duties they owed Citizens. Citizens also alleges SoFi conspired with the former employees to compete unfairly. The claims were brought under federal and state trade-secret laws, Connecticut’s unfair trade practices law and the federal racketeering law known as RICO.
SoFi is the only defendant named in the lawsuit. Citizens says it is separately pursuing arbitration against some of the former employees.
Citizens is asking the court to prevent SoFi from using or disclosing its confidential information and from helping Citizens employees violate their contracts. It also wants SoFi to return or permanently destroy copies of Citizens’ records and is seeking compensatory and punitive damages.
The case is assigned to U.S. District Judge Stefan R. Underhill. A summons was issued Sept. 10, giving SoFi 21 days to respond to the lawsuit.
Citizens is represented by David A. Ball and Wilson T. Carroll of Cohen and Wolf in Bridgeport, along with Houston-based Henneman Rau & Kirklin.
