Freeman & Co sues former exec director, alleges theft of trade secrets

  • Seto joined Freeman in January 2017
  • Seto resigned from Freeman around March 9, 2018
  • Suit alleges Seto tried to solicit business while still employed by Freeman

Freeman & Co, a boutique investment bank, has sued Tony Seto, a former executive director, claiming he stole “highly confidential trade secrets” when he left and joined a rival bank.

In a lawsuit filed in U.S. District Court in Manhattan, Freeman, of New York, alleged that Seto attempted to woo clients before he resigned, uploaded proprietary information to his personal hard drives and cloud accounts, and refused to return the info even after joining competitor Berkshire Capital.

“Seto engaged in efforts to shop Freeman’s clients, leads and other confidential information to the company’s direct competitors and to assist those competitors in soliciting and diverting the company’s existing and prospective business opportunities in order to enrich himself to the detriment of the company,” the lawsuit said.

The lawsuit, dated April 11, names Berkshire as a defendant for allegedly aiding and abetting Seto. A May 7 summons notified Berkshire and Seto that they have 21 days to respond to the lawsuit.

Seto is no longer working at Berkshire, a source said. The Berkshire website does not list Seto as an employee. Seto could not be reached for comment.

Eric Weber, Freeman’s CEO, declined comment. Calls to Berkshire were not returned.

Freeman’s main business is providing financial services advice on M&A. Berkshire also offers financial services M&A advisory.

Seto, who specializes in payments, joined Freeman in January 2017 as co-head of the firm’s financial-technology sector. He resigned from Freeman on or about March 9 and began working at Berkshire just days later, roughly March 12, the filing said.

Seto’s alleged activity began months before he resigned, the lawsuit said. Freeman said it discovered information showing that Seto began calling on clients and attempted to solicit away business to Berkshire even though Freeman was still paying him a “significant compensation,” the lawsuit said. This included a $250,000 base salary.

Seto left behind a spreadsheet, dated Feb. 1, at his desk that revealed he had an engagement letter with an unnamed client, Freeman said. The spreadsheet indicated he had a “100 percent” probability of signing up the client with an estimated $2.25 million fee. “Awaiting me to land at new platform,” a note on the spreadsheet said.

Seto allegedly uploaded Freeman trade secrets from his work computer to his personal hard drives.

The investment bank claimed Seto took with him information contained in various Freeman databases, including data from Salesforce and the firm’s own proprietary fintech database. This included at least two lengthy printouts of highly valuable Freeman client info that was generated from the databases, the lawsuit said.

And since resigning from the company, Seto has been regularly logging into Freeman’s Salesforce account and illegally accessing its confidential information on clients, prospects and confidential client notes to use at Berkshire, Freeman alleged in the lawsuit.

Bankers, when they join, typically sign agreements that prevent them from soliciting former clients when they exit to join a rival. They may also agree to “gardening leave.” During this period, the banker doesn’t go to work and is unable to contact clients or colleagues.

Freeman is demanding a jury trial and said it is entitled to punitive damages.

The bank is claiming breach of contract, misappropriation of confidential information and computer fraud, and it says Seto violated a fiduciary duty of care he owned to the bank.

Freeman is seeking temporary and permanent injunctions against Seto to stop him from using the information and requiring that he return the data.

The bank wants to bar Berkshire from employing Seto for two years. Freeman also wants to stop Seto and Berkshire from soliciting any of its clients or employees for two years.

Action Item: Contact Freeman’s Eric Weber at +1 212-830-6161

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