Claim Against Financial Advisor Survives Summary Judgment Based On Evidence Its Services Were “So Incompetent” They Were “Worse Than No Services At All”

Posted: April 27, 2026 / Written by: Ian Weiss, Thomas A. Kissane, Samuel L. Butt, Channing J. Turner / Categories Commercial, Breach of Contract, Summary Judgment

Claim Against Financial Advisor Survives Summary Judgment Based On Evidence Its Services Were “So Incompetent” They Were “Worse Than No Services At All”

On March 31, 2026, in Guggenheim Securities, LLC v. Falcon’s Beyond Global, LLC, et al., Index No. 651585/2024, Justice Melissa A. Crane granted in part and denied in part dueling motions for summary judgment. The court dismissed the defendant’s counterclaims against its financial advisor for fraud, breach of fiduciary duty, and equitable rescission, but denied both parties’ motions for summary judgment on their breach of contract claims. The Court explained:

[T]he court denies both motions to the extent they seek summary judgment on their breach of contract claims. By the parties’ contract, Guggenheim was supposed to, inter alia, “review and consideration [sic] from a financial and capital markets point of view of potential structures and terms for the Transaction”[.] As explained at oral argument, there is evidence in the record that plaintiff’s services were so incompetent that they amounted to worse than no services at all.

It is questionable whether Guggenheim gave correct advice in recommending a SPAC transaction in the first place. But, certainly by the time of the contract amendment on February 22, 2023, there is evidence that recommending defendant to “stay the course” and continue with the SPAC would be disastrous. The record supports that, at no point did plaintiff advise defendant otherwise, even though plaintiff knew the SPAC market was tanking. For example, Guggenheim’s Executive Chairman testified that he believed the SPAC Market in late 2022 was “overdone.” … Guggenheim even pulled its own personal SPAC deal off the table, yet it never told defendant to pull theirs. In addition, there is evidence in the record that Guggenheim may have violated FINRA rules by not properly considering Falcon’s financials[.] Also, Guggenheim appears to have taken no action to reduce redemptions.

These are facts from which a fact finder could plausibly infer that Guggenheim insisted on an amendment to obtain a fee regardless of the success of the transaction, because they knew the deal would be disastrous for its client. At the very least, this could be a breach of the covenant of good faith and fair dealing inherent in every contract, if not outright breach[.]

The attorneys at Schlam Stone & Dolan LLP frequently litigate disputes involving financial advisors and financial brokers. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.