Securities and Exchange Commission registered investment adviser Virtue Capital Management, LLC (Virtue), discovered that its former fiduciaries and now competitors Coppell Advisory Solutions, LLC d/b/a Fusion Capital Management (Fusion) and Howard Capital Management, Inc. (HCM) (and indirectly PanthRex Asset Management, LLC and Optivise Advisory Services, LLC), were working in concert to unfairly compete with and unlawfully convert Virtue’s book of business to themselves. The matter was increasingly complicated by the fact that Virtue had conflicting arbitration clauses with Fusion and HCM and no contractual relationship at all with PanthRex and Optivise. As counsel to Virtue, Waller had to act fast to halt the competitors’ unfair use of Virtue’s confidential and trade secret information, and the competitors’ solicitation—both directly and through agents—of Virtue’s top investment adviser representatives, registered investment adviser customers, investment clients, and employees.
Waller sought on Virtue’s behalf with the American Arbitration Association a motion for Rule 38 Emergency Measures of Protection against all competitors. Against difficult resistance from the competitors both in briefing and at multiple hearings, Virtue was able to marshal and present evidence that clearly demonstrated that it had a likelihood of success on the merits, that the balance of harm if injunctive relief was not granted weighed in favor of Virtue, and that the public interest was best served by upholding the parties’ contracts and preventing unfair competition. After consideration of the parties’ substantial evidence, extensive pre-argument briefing, the hours long oral argument of counsel, and post hearing briefing, the Rule 38 Emergency Arbitrator issued an Award of Emergency Relief, enjoining Fusion and Howard, separately, from violating their agreements with Virtue, improperly soliciting Virtue’s accounts and advisers, and using Virtue’s trade secrets and confidential information. After additional hearings in which the competitors attempted to resist and set aside the injunction and to split up the claims against the multiple competitors, the matters were ultimately separately settled on terms favorable to Virtue.
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