Playing hardball, Sound Point, ex-CLO manager take noncompete dispute to court
A former Sound Point Capital CLO manager is being temporarily restrained from joining rival firm GoldenTree Asset Management, under a court order siding with Sound Point’s claims in a lawsuit that he violated terms of a noncompete clause.
Murtaza Haque cannot work for GoldenTree until at least mid-August, following a recent New York State Supreme Court decision that found Sound Point was within its rights to enforce a noncompete agreement forbidding working for another investment management firm for at least 90 days.
Haque had resigned from Sound Point In May and joined the rival New York investment firm in early June. He was served a cease-and-desist letter by Sound Point on June 14 that claimed he had violated separation terms of his previous job.
Along with violating the 90-day "garden leave" provision, Sound Point complained he had improperly forwarded himself confidential and proprietary Sound Point documents to a personal email account before his departure. Haque said any and all work material he emailed himself was related to his Sound Point work, and was not shared with GoldenTree or other third parties.
He also noted, according to court documents, that he had agreed to work with Sound Point’s business development director after his departure to smooth over the onboarding of a key pension-fund client.
Haque countersued Sound Point a day after the letter arrived in an attempt to invalidate the noncompete. But his request for a preliminary injunction and a temporary restraining order was shot down June 29 by New York State Supreme Court Justice Andrea Masley. Sound Point has filed counterclaims against Haque as well as GoldenTree.
Officials with Sound Point declined comment. GoldenTree did not respond to requests for comment.
Masley, a judge in the court’s commercial division, did not rule on the merits of Sound Point’s claims that Haque had downloaded Sound Point intellectual property.
But she ruled that its noncompete was enforceable, and issued an order putting it into effect for 75 days from his May 18 departure — on the condition that Sound Point pay his salary in the interim, according to court records.
“When the court weighs this short duration against the other factors of scope and geography, which are far broader, the court is compelled to find [the noncompete agreement] reasonable,” Masley wrote in her decision.
Haque had been with Sound Point since 2012, first as a consultant before becoming employed full time as a portfolio manager reporting directly to Sound Point managing partner and chief investment officer Stephen Ketchum. He was the designated portfolio manager for eight of Sound Point’s actively managed CLOs, and was among four members of the investment committee, according to documents filed with the lawsuit.
Sound Point, which manages 18 CLOs and has $17.1 billion in assets under management, is seeking counterclaims against Haque for breach of contract, misappropriation of trade secrets and breach of fiduciary duty. Sound Point is also filing claims against GoldenTree for tortious interference and unfair competition.
Both Haque and GoldenTree denied the allegations in an answer filed July 9.