Barton Wins TRO Against Advisors Under Computer Fraud and Abuse Act; Defend Trade Secrets Act

In Invst, LLC v. Jonathan McCarty, et al., No. 1:25-cv-00254-SEB-KMB (March 12, 2025), Barton secured a major win for its client in successfully petitioning for a Temporary Restraining Order (TRO) against two of its former financial advisors.

Barton client Invst, LLC is an Indiana-based registered investment advisory firm serving primarily business owners and entrepreneurial professionals. After two of its advisors were terminated, they founded a new advisory firm and began to solicit Invst’s clients. Invst subsequently filed a motion seeking a TRO, alleging that the former advisors had:

• accessed Invst’s protected computer systems without authorization, violating the Computer Fraud and Abuse Act (CFAA)
• misappropriated Invst’s trade secrets and other confidential information under the Defend Trade Secrets Act (DTSA)
• used these trade secrets to induce Invst’s clients to transfer hundreds of millions of dollars in assets under Invst’s management to a competing firm created by the two former advisors, constituting breach of contract and tortious interference

Invst’s motion sought a TRO enjoining the former advisors from utilizing the trade secret and confidential client information that they had obtained via Invst’s computer systems. Despite being locked out of their various Invst accounts after they were terminated in November 2024, the advisors were able to use 2-factor authentication and the help of their former Invst colleagues to regain access to certain of Invst’s platforms with confidential client information. The advisors then used this information to email Invst clients about transferring their assets to their newly created firm.

After a non-evidentiary hearing, the U.S. District Court for the Southern District of Indiana found in favor of Barton’s client. In general, for a TRO to succeed, the plaintiff must convince the court that:

1. it is likely to succeed on the merits
2. it is likely to suffer irreparable harm in the absence of preliminary relief
3. the balance of equities tips in its favor, and an injunction is in the public interest

The court determined that the defendants likely exceeded their scope of authority in accessing Invst’s client data and using it to solicit clients. Additionally, Invst was able to demonstrate that its business would likely suffer irreparable harm due to a loss of goodwill and trust among its clients that had chosen to remain with the firm after being solicited by the former advisors—an intangible loss not easily remedied with monetary damages.

The court found that the “retention and use of confidential information regarding clients who remain at Invst is likely to cause irreparable harm in the form of loss of client goodwill for which Invst will have no adequate remedy at law.” The court therefore ordered the two advisors to return and/or delete all information and documents related to Invst clients who had not yet transitioned or begun transitioning to the new firm.

If you have any questions regarding TROs, restrictive covenants, or advisor transitions, please contact the lead attorney on this case, James E. Heavey.