How Hedge Fund Managers Can Protect Their Trade Secrets in Light of Recent NY Appellate Ruling

A New York state appellate court recently issued a significant ruling in People v. Aleynikov that clarifies and settles the state’s ability to pursue criminal charges for theft of trade secrets in cases involving computer code. The ruling provides hedge fund managers an additional weapon in their arsenal to protect their valuable technology and trade secrets. In a guest article, Sean O’Brien, managing partner of O’Brien LLP, along with counsel Sara A. Welch and associate James Ng, discuss the theory of criminal liability used by the state of New York to convict Sergey Aleynikov for stealing trade secrets from his former employer, Goldman, Sachs & Co. For additional insights from O’Brien, see “Recent NY Appeals Court Rulings Clarify How Fund Managers May Pursue Former Employees for Breach of Fiduciary Duty and Improper Use of Performance Record” (Dec. 15, 2016); “DTSA Provides Hedge Fund Managers With Protection for Proprietary Trading Technology and Other Trade Secrets” (Jun. 23, 2016); and “How Can Hedge Fund Managers Protect Themselves Against Trade Secrets Claims?” (May 16, 2014). For coverage of other employment disputes involving alleged theft of trade secrets by employees of hedge fund managers, see “Quant Fund Manager Moves Aggressively Against Former Employee Who Allegedly Stole Trade Secrets and Other Proprietary Information” (Mar. 21, 2014); and “Opus Trading Fund Accuses Former Trader That Joined Competitor of Breach of Contract and Misappropriation of Proprietary Information” (Apr. 21, 2011).

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