BOSTON -- State Street Global Advisors has sued three former employees who defected earlier this month to Deutsche Asset Management-Americas, New York.
In court documents, Boston-based SSgA argues that Dean Barr, Joshua Feuerman and Richard Goldman signed non-competition agreements that restrict them from working for any of the "top five" investment firms after they depart SSgA.
A hearing was held last week in Suffolk Superior Court in Boston on SSgA's request for an injunction to block the Deutsche hirings. Judge Raymond Brassard is expected to make a decision this week.
Ten people resigned from SSgA Sept. 1, although two were convinced to remain, according to court arguments by SSgA attorney Mary O'Neill. Of the group, only Messrs. Barr, Feuerman and Goldman had contracts with SSgA that may prevent them from assuming their new jobs.
In its contract, SSgA defined the top five money managers as those firms ranked by Pensions & Investments in its annual list of investment advisers. Institutional Investor magazine also can be used, the contract states.
SSgA is relying upon P&I's May 17 report on the largest money managers, said Ms. O'Neill. SSgA ranked third and Bankers Trust Co., sixth, when ranked by total assets in that issue.
"If SSgA is removed from that list, Bankers Trust is fifth," Ms. O'Neill said during the court hearing.
Attorneys for Messrs. Barr, Feuerman and Goldman argued they relied on the worldwide money manager rankings in P&I's Aug. 9 issue to determine the top five. In that list, SSgA is seventh. Because the Deutsche/Bankers Trust merger closed after Dec. 31, those firms are listed separately in the Aug. 9 listing: Bankers is 13th, Deutsche is 27th.
Mr. Barr was SSgA's chief investment officer of global active quantitative strategies and director of research. He joined Deutsche as managing director and head of global quantitative and index strategies.
Mr. Feuerman was a portfolio manager and head of international quantitative equity strategies at SSgA. He joined Deutsche as a managing director of international quantitative strategies.
Mr. Goldman was head of SSgA's corporate defined benefit sales for the northeast region; he joined Deutsche as managing director and head of institutional sales.
Ms. O'Neill told the court the departures were harmful because they disrupted client relations at SSgA. Even before the SSgA employees went to Deutsche, SSgA client Manulife Financial, Toronto, expressed concern that certain SSgA employees were departing, Ms. O'Neill said. Manulife's list included the individuals recruited by Deutsche, she said.
Attorneys for Messrs. Barr, Feuerman and Goldman argued the contracts prevented their clients from pursuing better positions.
They were at-will employees whose SSgA contracts promised only future stock awards; Deutsche provided the employees with term contracts and signing bonuses, the attorneys said.
SSgA also accuses the three, particularly Mr. Goldman, of soliciting fellow State Street employees to join them at Deutsche.
Mr. Goldman's attorney David Rosenthal of Boston said all solicitation was done by Deutsche's New York headhunter Robert Warren of Warren International Inc., who defense attorneys said was paid $2.3 million to lift out the team.
"I heard that $1.9 million was given Mr. Leahy to make him stay, making him one of the highest paid people at SSgA," attorney Mr. Rosenthal said during the hearing. Peter Leahy is SSgA's managing director for global structured products.
"They didn't make any effort to make Mr. Goldman and Mr. Barr stay, but now they argue that these people are essential."