Cboe seeks dismissal of Exceed Holdings’ trade secrets case

Maria Nikolova

Cboe Options says that Exceed fails to specify the confidential information that was supposedly disclosed or how it constitutes a trade secret.

Chicago Board Options Exchange (CBOE), now known as Cboe Options Exchange (Cboe), a part of Cboe Global Markets Inc (NASDAQ:CBOE), is seeking to refute accusations made by Exceed Holdings LLC dba Exceed Investments LLC about trade secrets misappropriation.

On February 9, 2018, Cboe filed a Motion to Dismiss with the New York Southern District. The document, seen by FinanceFeeds, says that Exceed’s allegations make crystal clear that the case at hand is about Exceed’s disappointment that Cboe Exchange, Inc. (Cboe) did not invest in Plaintiff.

Let’s recall that, in early 2015, CBOE expressed interest in getting to know more about Exceed, with the potential goal of investing in Exceed to gain a foothold in the marketplace for structured note products. On February 24, 2015, Exceed and CBOE signed a Non-Disclosure Agreement.

On or about January 25, 2016, however, CBOE announced its investment in VEST – a competitor of Exceed. During this same period where CBOE kept promising Exceed that a deal was imminent, VEST developed and launched a new structured note project that, according to Exceed, was based entirely on the proprietary approach Exceed disclosed to CBOE under the NDA.

Exceed alleges that “CBOE provided a mortal blow that resulted in significant damage” to Exceed.

In its Motion to Dismiss, Cboe notes that the parties expressly agreed in the NDA that there was no obligation for Cboe to make any investment.

In addition, Cboe says that Exceed fails to specify the confidential information that was supposedly disclosed or how it constitutes a trade secret, how it was allegedly misused, or any other misconduct. Instead, according to Cboe, Exceed makes its claims by “merely hinting at general similarities between a structured note product that it says it intended to market and the products brought to market by VEST”.

Moreover, Cboe insists that product similarity was anticipated by the parties in the ND: the parties specifically agreed that each had been and would continue to be “by [itself] or with others developing … financial products … that may be substantially similar to the … financial products” of the other. Cboe says it did exactly what the parties agreed it could do, i.e., it partnered with another company which was developing financial products of a similar type (specifically, structured note products) as Exceed.

Cboe is accused of Fraudulent Inducement, Promissory Estoppel, Breach of Contract, Misappropriation of Trade Secrets, and violations of the Federal Defend Trade Secrets Act. According to the Complaint, the amount of damages is to be determined at trial but is clearly in excess of $5 million.

The case is captioned Exceed Holdings LLC v. Chicago Board Options Exchange, Incorporated (1:17-cv-08078).

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