Kasowitz Secures Court Sanctions Against Envestnet, Inc., a Financial Services Company Owned by Bain Capital, for Intentional Destruction of Evidence

Last week, Envestnet, Inc., a financial services firm owned by Bain Capital, was sanctioned by a federal judge in Delaware for deliberately destroying “highly relevant” evidence in a theft of trade secret case brought by FinancialApps, LLC.  The action, which was commenced by Kasowitz LLP in 2019, is now headed to trial.
 
On December 30, 2025, Judge Jennifer L. Hall of the United States District Court for the District of Delaware adopted a Special Master’s Report and Recommendation, affirming the imposition of sanctions on Envestnet and another defendant, Yodlee, for their intentional destruction of evidence that was “highly relevant to the claims and defenses in this case.”  In this case, which involves Defendants’ alleged theft of FinancialApps’ proprietary fintech software, Judge Hall noted that “the evidence—including the fact that Defendants made a deliberate decision to destroy a highly relevant data source called ‘Papertrail’ six days after Defendants were sued, notwithstanding that the monthly cost to preserve the data was negligible—supports a finding of intent to deprive.”  
 
Judge Hall also affirmed the finding that Envestnet was directly involved in the intentional destruction of highly relevant evidence, stating: “To be clear, Defendant Envestnet is not subject to the sanction because it owns Defendant Yodlee . . . .  Rather, Envestnet is subject to the sanction because it was involved in the decision to destroy the Papertrail evidence.” 
 
Judge Hall further affirmed the Special Master’s recommendation that a permissive adverse inference should be imposed on Defendants as a sanction at trial, stating: “I agree that the appropriate remedy is to permit evidence of the spoliation to be presented at trial and permit . . . the factfinder to presume that the Papertrail evidence would have been unfavorable to Defendants.” 
 
FinancialApps has already prevailed against Envestnet and Yodlee’s attempt to dismiss its claims at summary judgment, and its case against the multi-billion-dollar wealth management giant owned by Bain Capital is now headed to a jury trial in Delaware Federal Court, where statutory treble damages may be imposed if Defendants’ alleged misconduct is found to have been intentional. 
  
The Kasowitz LLP team representing FinancialApps is led by partners Marc E. Kasowitz, Matthew A. Kraus, and A. Macdonald Caputo, Jr., and includes associates Joshua Marks, Frank Piacenti, and Kathleen Kennedy.