Jan 20, 2019: Apollo Global Management Private equity company logo seen displayed on smart phone

We all know things can sometimes get ugly when partners leave law firms to join competitors or start their own shops (cough, Selendy & Gay). Turns out, they play even rougher in the world of private equity.

A recent arbitration decision shines a light on what Bloomberg has called a “Wall Street blood feud”— when senior partner Imran Siddiqui left industry giant Apollo Global Management in mid-2017 to launch competitor Caldera Holdings Ltd.

The allegations are wild—perjury, false identities, a mole within Apollo and the claim that Siddiqui was a point person on a deal for Apollo while secretly pursuing the same deal for his new company.

Lawyers for both sides insist they came out ahead in the arbitration. Mintz Levin managing partner Robert Bodian, who represents Apollo, says his client is “very pleased with the result.” The arbitrator's decision “properly addresses the serious breach of duty by their former employees….It's not about the money.”

Apollo sought $300 million in damages as well as injunctive relief. It was awarded $1.225 million and denied the injunction.

“To call it a 'win' is delusional,” Siddiqui's lawyer Lisa Solbakken of Arkin Solbakken wrote in an email.

Defense co-counsel Sean O'Brien of O'Brien LLP added, “We destroyed their central claim…we estimate that Apollo spent north of $5 million in legal fees to obtain a $1 million verdict…Not the kind of return on investment one would expect from a global hedge fund. And in light of the total loss on the main claim, a deeply embarrassing outcome for Apollo.”

Still, their client didn't exactly walk away smelling like roses, which is probably some consolation for Apollo.

“Much of the evidence adduced at this hearing is deeply troubling,” wrote JAMS arbitrator Mark Segall, who found that Siddiqui and a more junior ex-Apollo partner, Ming Dang, had “serious credibility issues” and engaged in conduct that “violated both the letter and spirit” of Apollo's code of ethics.

Segall—who before he became an arbitrator was head of litigation at JPMorgan Chase—delivered a mixed decision on April 26. The ruling became public as part of a filing in a defamation case by Siddiqui against Apollo in New York state court.

Apollo, which has $280 billion in assets under its control, first sued Siddiqui for breaching his non-compete agreement after he jumped ship in 2017 to found Caldera.

His departure was apparently a blow. The Financial Times described Siddiqui as “a star executive at Apollo, who played a leading role in setting up its insurance affiliate Athene Holding. Created in 2009, the vehicle has proved highly lucrative for Apollo, generating more than $400m in annual fees for managing the insurance company's investment portfolio.”

Still, it seemed like Siddiqui and Apollo settled their differences in an earlier arbitration, striking a deal on February 21, 2018.

Apollo agreed to release the ex-partner from his non-compete, and in exchange, Siddiqui forfeited $15 million, though he remains bound by an indefinite confidentiality agreement. The settlement also meant Apollo released Siddiqui from all related “claims, complaints, demands or causes of action” prior to the date of the settlement.

Segall in his decision offered up a harsh assessment of Siddiqui's conduct throughout 2016 and until he resigned in March of 2017.

“There is considerable evidence that in that time frame, he collected and transmitted Apollo's and Athene's confidential information, that he solicited investors in an attempt to persuade them to invest in Caldera rather than Apollo or Athene, that he competed with Apollo and Athene for acquisition targets, and that he remained on Athene's Board of Directors for the purpose of protecting his own personal interests,” Segall wrote.

That's not all.

After Siddiqui quit, he was subject to post-employment restrictions, including a one-year ban on going after Apollo's investors. But Segall found Siddiqui solicited them anyway. “Siddiqui admitted that rather than engage in this activity, his wife told him that 'he should have just sat on the beach for a while.' His wife was right.”

As unsavory as all this may be, Segall found there's not much Apollo can do about it. The company agreed to the release—which he said “could not be more broad”—and pocketed the $15 million.

Apollo now claims Siddiqui violated the settlement agreement by wrongfully using and disclosing its confidential information—one area not covered by the release. The company also alleges that Ming Dang, who continued to work at Apollo until he abruptly quit in October of 2018, was secretly in cahoots with Siddiqui.

Segall in his decision skewers Dang. The arbitrator found that he secretly accessed highly confidential Apollo files to gather information about Apollo's pending bid for American Equity Investment Life Holding Co., or AEL, including Apollo's offer price. Segall found it likely that Dang then used a Google-based email address to transmit the files outside of Apollo.

Segall ruled that Dang was on the hook for $1 million for claims including breach of fiduciary duty, aiding and abetting Siddiqui's breach of fiduciary duty, breach of contract, unfair competition and common law fraud.

Crazy coincidence: Siddiqui's company, Caldera, also wanted to buy AEL. The day after Dang accessed the Apollo file, Segall wrote, Caldera submitted a higher bid—though it was not accepted.

Apollo asked Segall to issue an injunction preventing Caldera from attempting to acquire AEL.

But here's the thing: Segall found that as Apollo and Athene did more due diligence about the prospective AEL purchase, their internal analysis showed that it only made sense at a below-market price. In fact, Segall said, Apollo realized “an acquisition of AEL would actually be quite harmful.”

Segall declined to issue the injunction, finding that he lacked the authority to do so based on the language of the February 21, 2018 settlement agreement. But if Apollo didn't even want to buy AEL, it's not such a terrible blow. (Apollo for the record says it's still interested.)

As for the other claims against Siddiqui, Segall found that he failed—badly—to honor his commitment to return or destroy all Apollo documents within five days after the February 2018 settlement.

Siddiqui submitted an attestation under penalty of perjury that he'd done so—but later admitted he “did not conduct any electronic searches of his devices,” Segall wrote. “There is no legitimate excuse for this blatant failure.”

But Segall found there was no proof that Siddiqui misused confidential information. Yes, he may have drawn on his general knowledge and experience from his time at Apollo to make the bid for AEL. But if Apollo wanted to prevent that, “it should not have agreed to release the covenant not to compete in exchange for $15 million in consideration from Siddiqui in the first place.”

See also: Arbitrator Slaps Ex-Apollo Global Employees' Use of Confidential Information, but Blocks Bid for $300M in Damages