Robert Turner defied gravity, for a time.
Turner Investments L.P., his Berwyn-based mutual funds and portfolio management firm, was investing $28 billion at its peak in 2008 for clients awed by Turner's record of beating stock fund benchmarks.
The Turner funds' clients included giant insurers, Pennsylvania and other states, Philadelphia and other cities, colleges, and corporate and union retirement plans.
Even Vanguard Group, the great champion of autopiloted index-fund investing, paid Turner to pick stocks for its Vanguard Growth Equity fund.
But now those blue-chip clients are gone. Turner Investments L.P. manages under $1 billion, and many of the top managers who did star turns as Turner stock gurus on CNBC and in Dow Jones publications during the firm's fat years have left, some acrimoniously.
Twenty-five years after he quit Meridian Bank to start his own investment house, showcasing meticulous research by specialized expert managers, Turner is still hiring seasoned stock-pickers, adding products, trumpeting Morningstar Inc.'s new five-star rating of his Turner Medical Sciences Long/Short Fund, and marketing to a new crop of hopeful investors.
But Turner, son of a union boilermaker from Yates City, Ill., is also busy in court, fighting at least four former stars and two of the firms they left him for.
Turner, his firm's new chief executive, Stephen Negrotti, and other current and former Turner managers declined to comment, citing the litigation. Chester County court records and federal securities filings detail their struggles.
In 2007, Turner filed to take his firm public on the Nasdaq stock market, revealing that the funds had paid him more than $20 million so far that year, and more than $30 million the year before.
That initial public stock offering was withdrawn in the crash of 2008. Over the next five years, Turner funds too often failed to repeat their old magic. Vanguard fired Turner in 2009. The City of Philadelphia fired Turner, once among its underfunded pension system's largest managers, for "underperformance" in 2010.
By 2013, pressed by long-term employees, Turner agreed to seek a buyer for the firm, which still managed $8 billion. Lazard Asset Management made an offer. Delaware Investments also showed interest.
Turner rejected Lazard's offer as too low, and fired senior manager Andrew Glaser, who had negotiated the deal.
In the end, Turner decided not to sell the firm. Other big clients left. Longtime employees quit. Glaser joined Lazard. He was followed there by Turner veteran Frank Sustersic, one of the firm's most visible fund managers.
In December 2013, Turner lost William McVail, a 15-year veteran who said Turner owed him unpaid bonuses. McVail applied to join Philadelphia-based Penn Capital and found that Turner wouldn't confirm that McVail was free to take another job under his old contract.
In September, McVail sued Turner in Chester County Common Pleas Court, charging "tortious interference" with Penn Capital and listing others who had lately left Turner: Tom Trala, Turner's late executive managing director and chief financial officer, now at Franklin Square Capital Partners; James Wylie, chief marketing officer, now at Newton Capital Management; John Finnegan, managing director-client services, now at Delaware Investments. And more.
Turner's lawyers responded that McVail's "abrupt departure" caused "the loss of clients" and at least some of the $2 billion he had managed. McVail denied he hurt Turner, noting that he was soon replaced.
On Oct. 1, Turner sued Sustersic and his new employer, Lazard, arguing that the firm, having failed to buy Turner, had decided "it would obtain the components of Turner's business that Lazard wanted by less honorable means." Lazard and Sustersic denied doing anything illegal.
In January, Turner sued two more of his ex-stars, Ralph Wetmore II and Donald Smith, and their new employer, BNP Paribas Investment Partners, alleging the pair "absconded to BNP with Turner's trade secrets, confidential information and knowledge that Turner invested years and millions of dollars to develop," violating their contracts.
To the contrary, the defendants responded, it was Turner who violated Smith's and Wetmore's employment agreements, when the firm cut their pay. Smith and Wetmore said they left, after a combined 23 years, because "Turner no longer resembled" the firm they had joined: "Its assets were plummeting, its funds were closing and its senior executives and portfolio managers were departing."The men's response also featured a humbling argument: The processes and methods Smith and Wetmore used, formerly at Turner, now at BNP Paribas, aren't special or proprietary, their lawyers wrote; they "are merely the typical tradecraft that any investment management company would use."
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