How an Employee's Secret Recordings Put Company at Center of Trade Secrets Theft Case
According to a lawsuit filed in federal court Friday, Steven Bongiovanni stole confidential information from Graham Capital Management. The company is suing to get the information back.
October 09, 2018 at 01:17 PM
4 minute read
A Rowayton-based investment firm has countersued a former senior analyst for breach of contract, for allegedly stealing confidential trade secrets and refusing to return them.
According to the lawsuit, former analyst Steven Bongiovanni admitted under oath during a Sept. 27 deposition with counsel for Graham Capital Management that he had secretly recorded meetings where discussions of confidential company proprietary trading systems and models took place. The lawsuit maintains Bongiovanni admitted to having in his possession at least five recordings of meetings with company personnel, including three research department discussions. Bongiovanni, the suit contends, also testified he might also have recordings of other company meetings on backup drives in his homes in Vermont and Connecticut.
Graham Capital filed a federal lawsuit against Bongiovanni on Friday.
The investment firm manages approximately $15 billion in assets on behalf of global pensions, wealth funds, endowments and foundations, and individual investors, using a variety of discretionary and quantitative investment strategies. It was founded in 1994 and has about 200 employees.
But now, one of these former staffers is at the center of a dispute that has landed Graham Capital in court.
The litigation stems from Bongiovanni's December 2017 age-based discrimination lawsuit against the firm. The company fired the former employee, who is 57 years old, as its senior quantitative research analyst on Oct. 1, after a 12-year stint with the firm. That same day, Graham Capital's attorneys sent an email to Bongiovanni's attorneys demanding the return of all company documents, recordings and computer programs by Oct. 3. The materials were not given to the company by that date and Graham Capital filed the federal lawsuit two days later.
The lawsuit says Bongiovanni attended numerous research department meetings “at which there was wide-ranging discussions of GCM's confidential, proprietary, and trade secret information, including details and parameters of GCM's various trading systems and models. Research department meetings also included discussions regarding ideas for and the development of new trading systems.”
According to Daniel Schwartz, one of Graham Capital's two Day Pitney attorneys, the information Bongiovanni allegedly has “is extremely harmful. We don't know what documents he currently has, and he has not disclosed to us the nature of the documents he has. We are concerned about the documents, but we are more concerned about the recordings he has.”
Schwartz is assisted by colleague Howard Fetner.
“Unbeknownst to anyone, he hid a recording device in his pocket and turned the device on during various research department meetings in 2017 and 2018,” Schwartz continued. “The discussions at those meetings concerned Graham Capital's intellectual properties, particularly its trading system and programs. The information would be extremely harmful if it was shared with a competitor.”
The confidential information Bongiovanni allegedly took and has not returned is used by the company “to trade billions of dollars worth of financial instruments, including futures, foreign currencies, and equities,” according to the suit.
In the deposition, Bongiovanni said he had not shared the information with anyone, Schwartz said. The attorney declined to say whether the company would seek criminal charges against the ex-staffer.
The lawsuit cites two counts: breach of contract and breach of fiduciary duty.
The lawsuit seeks an injunction requiring Bongiovanni to return all company trade secrets in his possession; an injunction permanently barring Bongiovanni from using any confidential information in any manner for any purpose; an injunction permanently barring Bongiovanni from disclosing the company's confidential information to anyone outside of the company; and attorney fees.
Bongiovanni is represented by Mark Carey, a Southport-based solo practitioner. Carey did not respond to a request for comment Tuesday.
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