Money manager Freeman Investment Management Co. filed a lawsuit against Russell Investments in November, alleging the Russell's stability indexes violate an agreement with Freeman founder John Freeman, according to court files unsealed May 14 by a U.S. District Court judge.
The suit, filed in the U.S. District Court in San Diego on Nov. 29, alleges that Russell violated a non-disclosure agreement it signed in December 2009 in connection with a venture to propagate “a new family of style indices based on extensive research performed by Freeman,” according to a news release from law firm Knobbe, Martens, Olson & Bear, which is representing Freeman Investment Management.
The lawsuit alleges that Russell and Freeman worked on a volatility-based index in 2010 as a potential joint venture between the firms, and “that after learning of Freeman's confidential proposals and strategy, Russell did not proceed with the venture, but used Freeman's confidential information anyway,” according to the news release.
The suit alleges that Russell used Freeman's research despite not moving forward with the joint venture, launching its line of stability indexes in February 2011 without providing any notice, compensation or attribution to Mr. Freeman.
London Stock Exchange Group earlier this week confirmed it is in “exclusive discussions” to acquire Russell Investments from Northwestern Mutual Life Insurance Co., which had announced in January it was considering selling Russell.
Kate Stouffer, Russell Investments spokeswoman, sent an e-mailed statement from the firm stating that “this case is without merit, and we are vigorously defending against it. We have filed a motion to dismiss with the court, which is pending."