Please join us for a one-hour CLE webinar on Wednesday, March 20, 2019, at 1:00 p.m. Eastern / 12:00 p.m. Central / 10:00 a.m. Pacific.

On March 20, 2019, at 12:00 p.m. Central Time, in Seyfarth’s second installment of its 2019 Trade Secrets Webinar Series, Seyfarth attorneys will focus on trade secret and client relationship considerations in the banking and financial services industry.

Seyfarth attorneys J. Scott Humphrey and Marcus Mintz will address the following topics:

  • Practical steps financial institutions can implement to protect trade secrets and client relationships
  • What to do if your trade secrets are improperly removed or disclosed or if a former employee is violating his/her restrictive covenant agreements
  • How to prosecute a case against a former employee who is a FINRA member
  • The impact of the Protocol for Broker Recruiting on trade secrets and client relationships

*CLE Credit for this webinar has been awarded in the following states: CA, IL, NJ and NY. CLE Credit is pending for GA, TX and VA. Please note that in order to receive full credit for this webinar, the registrant must be present for the entire session.

In Seyfarth’s second installment in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Scott Humphrey, Erik Weibust, and Marcus Mintz focused on trade secret and client relationship considerations in the banking and financial services industry, with a particular focus on a firm’s relationship with its FINRA members. In addition, the panel covered what to do if trade secrets are improperly removed or disclosed or if a former employee is violating his/her restrictive covenant agreements, how to prosecute a case against a former employee who is a FINRA member, and the impact of the Protocol for Broker Recruiting on trade secrets and client relationships.

As a conclusion to this well-received webinar, we compiled a summary of takeaways:

  • Remember that you can seek court injunctive relief (Temporary Restraining Order and, possibly, Preliminary Injunction) before proceeding in FINRA
  • The definition of a trade secret varies, but you must take adequate steps to protect them as a company, and the information cannot be publicly available or easily discovered, to merit enforcement under the law.
  • Employers can take steps at all stages to protect their confidential information—don’t forget to implement on-boarding and off-boarding procedures, as well as policies and procedures that will be in effect during an employee’s tenure, to protect your information before a problem arises.

On Tuesday, March 27, in Seyfarth’s second installment in its 2018 Trade Secrets Webinar Series, Seyfarth attorneys Scott Humphrey, Erik Weibust, and Marcus Mintz will focus on trade secret and client relationship considerations in the banking and financial services industry, with a particular focus on a firm’s relationship with its FINRA members.

The panel will address the following topics:

  • Practical steps financial institutions can implement to protect trade secrets and client relationships
  • What to do if your trade secrets are improperly removed or disclosed or if a former employee is violating his/her restrictive covenant agreements
  • How to prosecute a case against a former employee who is a FINRA member
  • The impact of the Protocol for Broker Recruiting on trade secrets and client relationships

The CLE webinar is one hour long and is from 1:00 p.m. to 2:00 p.m. Eastern.

For more information and to register, click the button below.

 

On Tuesday, August 26, 2014 at 12:00 p.m. Central, Seyfarth attorneys Scott Humphrey, Jason Stiehl and Rebecca Woods will present the sixth installment in its series of 2014 Trade Secret Webinars. They will focus on trade secret and client relationship considerations in the banking and finance industry, with a particular focus on a firm’s relationship with its FINRA members.  Topics will include:

  • Practical steps financial institutions can implement to protect trade secrets and client relationships.
  • What should you do if your trade secrets are improperly removed or disclosed, or if your former employee is violating his/her agreements.
  • How do you prosecute a case against a former employee who is a FINRA member.
  • The impact of the Protocol for Broker Recruiting on trade secrets and client relationships.

Our panel consists of attorneys with experience advising clients on restrictive covenant and trade secret issues.

If you have any questions, please contact events@seyfarth.com .

*CLE: CLE Credit for this webinar has been awarded in the following states: CA, IL and NY. CLE Credit is pending for the following states: GA, NJ, TX and VA. Please note that in order to receive full credit for attending this webinar, the registrant must be present for the entire session.

Registration

There is no cost to attend this program, however, registration is required.

 

 

By Nicholas De Baun

Occasionally, you may need emergency relief against a former employee who has absconded with a client list, your confidential information, and the clients themselves. If you are very unlucky, you may need to get a TRO against his new employer as well. If you, the former employee, and the new employer are all required to arbitrate any claims before FINRA, how do you get your TRO?

FINRA Rule 13804

FINRA is well aware that its members and registered representatives may occasionally need emergency relief, and may need limited recourse to the courts to obtain a TRO. FINRA Arbitration Rule 13804 permits parties to obtain a TRO in court in conjunction with filing a statement of claim with FINRA. Under the rule, the parties obtaining a TRO must immediately submit their case to FINRA, which will appoint a panel on an expedited basis for summary adjudication on a preliminary injunction.

Procedure

Under the rule, a party seeking a TRO may obtain one from any court of competent jurisdiction. If the court issues the TRO, the party must immediately submit a statement of claim to the Director of Arbitration of FINRA requesting injunctive relief as well as all other relief sought, and must serve the statement of claim on all other parties at the same time. The rule requires a hearing on the request for injunctive relief to commence within fifteen days, and provides an expedited process for selecting the panel that will hear the request. The process is the same if an arbitration claim has already been filed and the request for injunctive relief is being brought as a counterclaim.

Although the rule does not require it, it is prudent to file your statement of claim simultaneously with the TRO. You can supplement the statement if the court modifies the relief you are seeking. In addition, it is wise to attach the statement of claim to your court pleadings and the court pleadings to your statement of claim so that your adversary cannot argue to either tribunal that you are pulling the wool over its eyes.

Pitfalls

A TRO can be a tricky thing to get, and courts seldom grant all of the relief you are seeking. Bear this in mind as you craft your TRO and argue for it in court – you will need a TRO that remains in place until FINRA can convene a hearing on injunctive relief. Allowing the court to provide a specific expiration date on the TRO is perilous, and numerous factors outside of your control could cause the hearing to be postponed beyond the court’s deadline, leaving you without injunctive protection. If possible, you should request that the court order the matter to arbitration, and direct that the TRO will remain in place until the arbitration hearing can occur.

By the same token, if you are on the receiving end of a TRO, be sensitive to the fact that a FINRA hearing on an injunction may not be convened as quickly as you would like. Be prepared to argue in court for a specific expiration date on the TRO, and if the court declines to order one, be prepared to return to court for further relief if the FINRA process takes longer than you anticipated.

Please join us for a complimentary webinar entitled Protecting Confidential Information and Client Relationships in the Financial Services Industry on May 23rd at 12:00 p.m. – 1:00 p.m. c.s.t.

The fourth webinar of the 2012 series will focus on trade secret and client relationship considerations in the banking and finance industry, with a particular focus on a firm’s relationship with its FINRA members.

Topics will include:

• What practical steps can financial services institutions implement to protect trade secrets and client relationships

• What should you do if your trade secrets are improperly removed or disclosed, or if your former employee is violating his/her agreements

• How do you prosecute a case against a former employee who is a FINRA member

• The impact of the Protocol for Broker Recruiting on trade secrets and client relationships

Our panel consists of attorneys with experience advising clients on restrictive covenant and trade secret issues and is recommended for in-house counsel and business leaders who handle trade secret or business litigation matters. CLE credit will be available for participants. You can register here.

In Seyfarth’s fifth installment in its series of 2013 Trade Secret Webinars, on Thursday May 23, 2013 at 12:00 p.m. Central Time, Seyfarth attorneys Scott Humphrey, Daniel Lanciloti, and Jason Stiehl will focus on trade secret and client relationship considerations in the banking and finance industry, with a particular focus on a firm’s relationship with its FINRA members. Topics will include:

  • Practical steps financial institutions can implement to protect trade secrets and client relationships.
  • What should you do if your trade secrets are improperly removed or disclosed, or if your former employee is violating his/her agreements.
  • How do you prosecute a case against a former employee who is a FINRA member.
  • The impact of the Protocol for Broker Recruiting on trade secrets and client relationships.

There is no cost to attend this program, however, registration is required.

If you have any questions, please contact events@seyfarth.com.

*CLE credit is available. Seyfarth has applied for CLE credit in IL, NY, and CA. If you would like us to pursue CLE credit in any additional states, please contact events@seyfarth.com. Please note that in order to receive full credit for attending this webinar, the registrant must be present for the entire session.

 

The fourth webinar of the 2012 series will focus on trade secret considerations in the banking and finance industry, including prosecuting claims against former employees who are FINRA members. Topics will include:

  • What practical steps can financial services institutions implement to protect trade secrets and client relationships
  • What should you do if your trade secrets are improperly removed or disclosed, or if your former employee is violating his/her agreements
  • How does the 2011 America Invents Act (Patent Reform Legislation) potentially impact the use of trade secrets
  • How do you prosecute a case against a former employee who is a FINRA member

Our panel consists of attorneys with experience advising clients on trade secret and non-compete issues concerning best practices, risk mitigation, and prosecuting and defending trade secret misappropriation claims. CLE credit will be available for participants in New York, Illinois, and California.

To register, please click here.

By Rina Wang, summer associate, and Timothy B. Nelson

The California Court of Appeal recently addressed the issue of the interpretation of arbitration clauses in the context of claims for misappropriation of trade secrets in the case of Valentine Capital Asset Management, Inc. v. Agahi, 174 Cal.App.4th 606 (1st Dist. 2009).

In Valentine, respondent John Valentine was the founder and president of Valentine Capital Asset Management, Inc. (“VCAM”) and Valentine Wealth Management, Inc. (“VWM”), neither of which was a member of the Financial Industry Regulatory Authority (“FINRA”). John Valentine was subject to FINRA rules and regulations through his affiliation with FINRA member Geneos Wealth Management, Inc., but not through his affiliation with VCAM and VWM. Appellants Agahi, Luippold and Ortale worked as employees of VCAM and VWM. In their capacity as employees of VCAM and VWM, Agahi, Luippold and Ortale were given business leads, and they were responsible for following up on the leads, developing a client relationship, and providing services to those clients. Agahi resigned from VCAM and VWM to form a competing firm, which added Luippold and Ortale as employees. The competing firm was also not a member of FINRA. The three defendants allegedly brought VCAM and VWM client databases with them to the competing firm. Valentine allegedly discovered that Agahi had e-mailed VCAM and VWM’s client database to Ortale, and that files and e-mails had been deleted from Agahi’s work computer prior to his departure. Valentine also allegedly discovered that Agahi was attempting to persuade clients of the Valentine companies to move their assets to Agahi and his competing firm. Valentine sued Agahi, Luippold and Ortale for misappropriation of trade secrets, intentional interference with contractual relations, intentional interference with prospective economic advantage, trade libel, slander, and common law and statutory unfair competition.

Agahi, Luippold and Ortale moved to compel arbitration, arguing that the dispute was subject to mandatory arbitration under FINRA’s arbitration clause because all of the parties were members of FINRA. Valentine opposed the motion, contending that the defendants had waived their right to arbitrate and that the disputes in the litigation were not subject to FINRA arbitration. The trial court denied the motion to compel arbitration, finding that FINRA was inapplicable because the parties’ dispute did not arise out of their business activities as FINRA members.

The Court of Appeal affirmed. The court first explained that written arbitration provisions in interstate commercial transactions are enforceable under the FAA. Thus, the FAA applied to determine the scope of arbitration provisions in contracts with FINRA-member firms. Before engaging in activities as a registered representative for a FINRA-member firm, all registered representatives of broker-dealers, investment advisors, and securities issuers must sign a “Uniform Application for Securities Industry Registration or Transfer,” also known as Form U-4. See McManus v. CIBC World Markets Corp., 109 Cal. App. 4th 76, 88 n. 3 (2003). Form U-4 contains an arbitration provision. Valentine and the defendants signed this form, thereby agreeing to arbitrate every dispute required to be arbitrated under FINRA rules. Arbitration of a dispute between associated persons is required under FINRA Rule 13200 only “if the dispute arises out of the business activities of a member or an associated person . . . .”

The Valentine court found that the phrase “business activities of . . . an associated person” is limiting and cannot include the activities of every possible business enterprise in which an individual “associated person” might be engaged. Valentine, 174 Cal.App.4th at 615. According to the Valentine court, this language, when reasonably read, must require arbitration of disputes only if they arise out of the business activities of an individual as an associated person of a FINRA member. Id.at 616.

The court held that there was no allegation that any of the parties were acting for any FINRA-member firm or as an associated person. No relation was alleged between any FINRA-member firm and the work performed for Valentine. The Court further determined that none of the purported wrongdoing was alleged to have occurred in the course of the parties’ duties as associated persons with a FINRA-member firm. Rather, it allegedly occurred with investment advisory firms that were not members of FINRA. The disputes thus related to defendants, but not to their business activities as associated persons of a FINRA member.

Although Valentine is based on the distinction between “broad” and “narrow” arbitration clauses, the court reached its conclusion based on the language of the pleadings. The plaintiff pled multiple causes of action alleging misconduct by various defendants.  When the court ruled on the motion to compel arbitration, the legal characterization of the parties in the Complaint controlled the ruling. 

The Valentine decision makes it clear that when prosecuting or defending a claim for misappropriation of trade secrets, one must be mindful of what forum is appropriate, arbitration or litigation. Furthermore, the Valentine decision also provides an example of the importance of pleading causes of action properly based upon the forum. Because Valentine pled his causes of action in a way that made it clear they were not based on the defendants’ business activities as associated persons of a FINRA member, Valentine was able to avoid FINRA arbitration.