January 26, 2021 Kevin Lawrence

Did Bridgewater Associates Manufacture Claims?  Some Lessons Learned From Its Arbitration Against Two Former Employees For Misappropriating Trade Secrets

Bridgewater Associates, the Connecticut-based asset management firm with nearly $140 billion in assets under management, tried to exert its will over two former employees by allegedly manufacturing evidence in an arbitration involving the misappropriation of Bridgewater trade secrets.  On the one hand, the case revealed the measures companies like Bridgewater take to both protect their trade secrets and pursue what they consider wrongdoers.  But on the other hand, it showed that heavy-handed, if not improper, tactics can misfire—possibly dooming the employer’s case or worse, like here, leading to sanctions.  

In these types of cases, arbitration is usually conducted out of public view.  Bridgewater’s case against its two former employees, Lawrence Minicone and Zachary Squire (collectively, “Respondents”), started out this way but was eventually brought to light after Bridgewater was accused of bringing its claims in bad faith.  Bridgewater’s alleged misconduct prompted two out of three members of an arbitration panel to award Respondents nearly $2 million in attorney’s fees, expert fees, and costs.  While a lone dissenter agreed that Bridgewater’s misappropriation claims should be denied for more limited reasons, he balked at handing out attorney’s fees and costs.  The Respondents filed a petition in the the New York Supreme Court (NY’s trial courts) to enforce the arbitrator’s award in Minicone, et al. v. Bridgewater Associates, LP while Bridgewater sought to have it vacated at the same time in Bridgewater Associates, LP v. Minicone, et al.  It was through these actions that the contents of the arbitration became public.             

From the Final Award issued by the majority of the panel members, it was evident that the proceedings were contentious, but some critical lessons and observations emerged:

  • Define the misappropriated trade secrets early (at least internally):  The panel repudiated what some claimants do in these types of cases, cast a wide net of information that was allegedly taken and then narrow down the claims during the discovery process.  Depending on the size of the breach, this may be your only road to protect your sensitive information, but where such information can be narrowed down and defined concretely, this may lend assurance to these types of claims.  A company may not want to reveal highly sensitive information, but as the dissenter recognized here, when a panel (or court) requests more specific information multiple times, the claimant should be prepared to respond.     
  • No specific trade secrets articulated: The panel rejected what appeared to be Bridgewater’s claim that it was an idea or way of thinking cultivated like a “Bridgewater logic” or “Bridgewater approach” that was misappropriated.  Typically, subjective knowledge or secrets of the trade are not considered trade secrets.  Rather, a claimant has to show that a trade secret was “misappropriated.”  If you can’t define it or show what the secret is, it becomes equally as difficult to show that it was improperly taken or misused.     
  • Bridgewater’s fortress-like office defenses worked against it: In many instances, the measures a claimant takes to keep its trade secrets private or inaccessible to the public helps establish that it is legally protectable material.  After all, secrecy is the key.  When Bridgewater provided scant information on its purported trade secrets, Respondents were able to turn its heavy defenses against it.  They made it clear that no move or keystroke goes unrecorded in Bridgewater’s offices and, if they removed such information, Bridgewater had evidence of it.  In the end, despite this surveillance, Bridgewater failed to demonstrate that Squire had any access to the five programs at issue and that Minicone had a marginal connection to one of them.      
  • Bridgewater signaled more information would be needed:  The panel referenced deposition testimony from a Bridgewater employee multiple times that, during early negotiations, Bridgewater needed the “literal code” of Respondents’ models to confirm that they exploited Bridgewater’s trade secrets.  The panel viewed this as an admission that Bridgewater would correspondingly need to provide its own code to validate its trade secret claims.  If you claim that your former employee is using your trade secrets to further or even just develop their business, you may need more information from them.  But you will likely need your own information to compare it against.  If you identified the likely misappropriated trade secrets early, you can have this information ready.  
  • Respondents’ confidence swayed the panel: Prior to Bridgewater’s arbitration demand, Respondents suggested that a third-party (even a former Bridgewater employee) compare the models of both companies to determine if Respondents’ models were based on Bridgewater “ideas.”  The panel found Respondent’s trust in their materials persuasive and, as the case dragged on, supported the panel’s growing perception that Bridgewater was just trying to undermine investor confidence in Respondents’ business.  This was an interesting strategy by Respondents (where they felt strongly), but Bridgewater could have gotten out of the case early if it possibly had stronger beliefs in its claims.

With those thoughts behind us, below is a more in-depth look at how the two members of the arbitration panel evaluated Bridgewater’s claims and the Respondents’ counterclaims.   

The arbitration panel rejected Bridgewater’s misappropriation claims

Bridgewater is an asset management firm with assets under management of nearly $140 billion.  Minicone became an employee in 2008 and Squire in 2010.  According to the arbitration panel they both signed employment agreements “with extensive confidentiality provisions and a two-year noncompete provision on termination at Bridgewater.”  In 2013, Minicone and Squire voluntarily left Bridgewater and they each landed jobs at investment management firms with no objections or limitations from Bridgewater.  

In 2015, Squire began discussing the creation of a new fund with a friend, which would become Tekmerion.  Squire contacted Minicone later that year and the pair “began building investment models, working nights and weekends until [Tekmerion’s] launch on February 1, 2017.”  Bridgewater became aware of Tekmerion no later than February 3, 2017, when a Bridgewater client advisor got a copy of Tekmerion’s pitch book. 

Squire testified that Bridgewater sought “unfettered access” to Tekmerion’s models and methodologies to purportedly confirm that they did not use any confidential and proprietary information.  They also expressed concern that Bridgewater’s tactics may have been designed to hobble Tekmerion right out of the gate because the claims would have to be disclosed to its investors and prospective investors.  I can see how any suggestion, let alone litigation, that Tekmerion’s models were pilfered from Bridgewater could impede investment.  

Interestingly, the arbitration panel found that Squire and Minicone’s “confidence that they had used nothing belonging to Bridgewater was demonstrated by their suggestion that both parties permit a neutral third-party expert to compare” the parties’ models.  Squire testified that it was during these negotiations that Bridgewater filed its arbitration demand.  The arbitrators noted that this demand was the first time that Bridgewater identified five trade secrets that Squire and Minicone allegedly misappropriated.  Tekmerion went on the offensive and filed a counterclaim, contending that Bridgewater’s fortress-like defenses would have detected such a breach.  Bridgewater’s security protocols included:  

  • Requiring employees to place cellphones and personal computers in signal-proof lockers;
  • Video recording of employees;
  • Recording phone calls and electronic communications;
  • Limiting access to confidential information to a need-to-know basis;
  • Requiring employees to sign separate trade secret agreements for each project implicating  a trade secret;
  • Logging computer access; 
  • Making employees enter and exit through designated doors; and
  • Requiring approval to send files or attachments externally.

This was a compelling argument, but these days it seems countermeasures are introduced just as quickly as new security products are rolled out.  Even more, a Bridgewater employee overseeing security for exiting employees testified that Squire did not have access to the trade secrets at issue here.  

Indeed, as the discovery process continued, the fact that Bridgewater never fully defined the misappropriated trade secrets (and refused to) may have raised some suspicions with the arbitrators.  It seemed that the only evidence that Squire and Minicone had access to the material were dubious lists compiled by Bridgewater solely for the litigation that were rife with inaccuracies.  

Instead, the arbitrators noted that Bridgewater relied on the imprecise notion of ideas, such as intuitive understandings and theories, that would establish a “Bridgewater logic” or “Bridgewater approach.”  Bridgewater’s machinations did not go unnoticed.  According to the arbitrators, Bridgewater’s employee’s “avoided articulating the specifics of any of the trade secrets or confidential information that was allegedly disclosed or used.  Its primary effect was to prolong the hearings without providing the specificity required to establish the alleged causes of action.”  It should be noted that one arbitrator dissented, suggesting that using a plain English description of the models was sufficient and likely done so to further protect the underlying code.           

In the end, Bridgewater’s failure to provide any information related to its trade secrets prevented its ability to prove its claims.  In one instance, Bridgewater refused to provide any information on a model Minicone allegedly worked on and thus could not show he was using a trade secret.  The arbitrators flagged Bridgewater testimony that its claims were based on an “educated guess” and they would need to see the “literal code” to determine exposure as an admission it was critical to see “literal code” to prove misappropriation.  This was also manifested in Bridgewater’s determination to obtain deep access to Tekmerion’s models and methodologies.  If Bridgewater needed access to this level of information from Tekmerion, it was axiomatic that Bridgewater would need to disclose specifics of its trade secrets to compare the two systems.  The arbitrators noted that it was essential for a plaintiff to specifically define the trade secrets at the beginning of the litigation to blunt any accusation that the action as nothing more than a “fishing expedition” with later hopes of identifying misused trade secrets in discovery.   

Squire and Minicone asserted Bridgewater’s claims were brought in bad faith 

Squire and Minicone asserted that Bridgewater did not need to prevail on its claims to achieve its goals—prevent them and Tekmerion from achieving success.  Bridgewater knew that Squire and Minicone would have to disclose the dispute not only to its investors, but prospective investors, choking off its funding sources.  

The arbitration panel had already found that Bridgewater failed to provide sufficient evidence that Squire had access to any of the five trade secrets at issue and that Minicone had access to four of the five.  It concluded that these allegations were made in “reckless disregard of Bridgewater’s own internal records and the knowledge of responsible employees.”  Indeed, while Bridgewater prolonged the proceedings without providing any evidence, the arbitrators found that Tekmerion’s founders’ claims that its methodologies were developed independently were supported by credible evidence.  

The arbitration panel determined that Bridgewater’s failure to describe the secret in its trade secrets prevented it not only from proving its claims, but deprived Squire and Minicone from preparing a defense.  Bridgewater even ignored numerous orders from the arbitrators to produce this information.  These facts, the arbitrators determined, supported an inference that Bridgewater knew that such disclosure would have demonstrated that Tekmerion’s methodologies were not based on Bridgewater’s trade secrets.  And yet Bridgewater continued the charade.

The arbitrators found that Squire and Minicone did not show “ascertainable loss” under Connecticut law by claiming that they had to sell a part of Tekmerion to pay for their defense or that they had to take time away from a developing business to defend against these claims.  But the arbitrators awarded Squire and Minicone nearly $2 million in attorneys’ fees and costs because of Bridgewater’s bad faith.      

Squire, Minicone and Bridgewater Associates settled the arbitration award for an undisclosed amount 

Squire and Minicone filed a petition in New York state court to enforce an order conforming the award and to enter judgment for their attorney’s fees.  For its part, Bridgewater countered that it had demonstrated that Squire and Minicone misappropriated its trade secrets and, even if didn’t, the two arbitrators’ grant of attorney’s fees was beyond their authority explicitly barred by employment contracts.  Before the court could rule on the petition, the parties resolved the dispute, but the substance of the settlement was not disclosed.  


In certain circumstances, an employee or former employee may seek immunity under the whistleblower provision of the Defend Trade Secrets Act of 2016 for taking confidential information.  While the DTSA provides an employer with a federal cause of action for trade secret theft, it provides an employee immunity from civil or criminal liability if the disclosure is to an attorney or government official for the sole purpose of investigating or reporting a violation of law or made to file a lawsuit under seal.


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