Rival payments players — Flexible Finance and Split Pay — and a finance executive who once interviewed for the Flex CFO seat are working “in good faith” to try and reach a “potential resolution” of a suit alleging the misappropriation of trade secrets, according to a Monday court filing.
The suit, filed by Flex last month in a Manhattan court, alleges Alex Anderson took advantage of access gained when interviewing to be its finance chief and passed proprietary information to its competitor, Split Pay, CFO Dive previously reported. New York-based Flex and Miami-based Split both provide payment services which enable users to divide larger transactions such as mortgages into separate payments.
Anderson, a former finance executive at Square operator Block, interviewed for Flex’s CFO seat and signed a non-disclosure agreement before receiving access to trade secrets as part of that process, including a confidential memo addressed to its board of directors and its “most sensitive financial model,” the “Flex Margin Model,” the Aug. 3 complaint filed with the U.S. District Court for the Southern District of New York alleges.
However, Anderson was also interviewing with Split at the same time and passed Flex’s “financial and strategic crown jewels” to the rival payment services provider, where he now allegedly serves as CFO, according to the complaint.
The parties are now conferring over “whether Defendants can agree to provide Flex with limited discovery concerning the issues in dispute” in order to reach a potential resolution, according to the Aug. 31 filing.
“Those discussions remain ongoing and the Parties intend to continue conferring in good faith,” the filing notes.
The court earlier approved an order stipulating that a third-party forensic accountant would review Anderson’s personal devices to find any confidential information as defined in the NDA agreement previously signed between Flex and Anderson, CFO Dive previously reported.
The third party was required to look through his devices, “relevant portions” of his email and cloud accounts, and to find and preserve any digital — as well as hard copies — of confidential information, CFO Dive previously reported.
The Aug. 17 order also asked Split to provide an affidavit from Anderson to Flex asserting the finance executive has not accessed the Flex Margin Model, board memorandum, or any other information belonging to Flex outside of the terms of the NDA agreement and that he has not “disclosed or disseminated any such documents or files or any other Flex confidential information” to Split or any third party.
The order also asked for an affidavit from Split co-founder and CEO Andrew Borovsky asserting that “neither he nor, to his knowledge based on a diligent investigation, anyone else at Split Pay has received or otherwise accessed, used, disclosed, or disseminated any Flex confidential information,” according to the order.
As of the Aug. 31 filing, Flex has received affidavits from both Anderson and Borovsky and an affidavit from the third-party forensic accountant.
Judge Margaret M. Garnett ordered a further joint status update from both parties by Sept. 30, according to a Tuesday endorsement filed with the court.
“The parties are reminded that they may request a referral to Magistrate Judge Willis for a settlement conference at any time, if the assistance of a third-party neutral would be beneficial,” the endorsement signed by Garnett notes.
Attorneys for Anderson and Split did not immediately respond to requests for comment. Attorneys for Flex did not immediately respond to requests for comment.
