Stevens v. Interactive Fin. Advisors, Inc.

Stevens, an insurance salesman, wanted to sell investment products. Because he was not registered with the SEC, Stevens needed to associate himself with a registered investment advisor, 15 U.S.C. 80b-3(a). In 2003, he associated with IFA, a loosely confederated investment advisory firm. In exchange for sharing clientele and fees with IFA, Stevens had access to IFA’s market resources and proprietary information, including access to a cloud-based data system. Stevens uploaded sensitive nonpublic information, concerning both investment clients and insurance clients (who were not IFA clients). IFA did not know that Stevens had entered the non-IFA client information into the database. IFA learned that Stevens was involved in a Ponzi scheme, severed its association with Stevens, and blocked Stevens from accessing the database. Stevens sued, alleging conversion, violation of the Illinois Trade Secrets Act, and tortious interference with business expectancy. The Seventh Circuit affirmed summary judgment for IFA on claims relating to securities clients. Federal law prevents a financial institution from disclosing nonpublic information of its clients to a nonaffiliated third party like Stevens. The court also affirmed a verdict in favor of IFA concerning insurance clients, upholding the trial court’s response to a question sent by the jury during deliberations, “Can we consider [filing] the lawsuit a demand for property?” The court stated that filing did not constitute a demand for the purposes of an Illinois law conversion claim. View "Stevens v. Interactive Fin. Advisors, Inc." on Justia Law