Federal Court Sanctions Envestnet For Destroying Evidence In FinApps Case

Core Viewpoint - Envestnet has been sanctioned by a Delaware federal court for destroying evidence that could support allegations made by FinancialApps in an ongoing lawsuit, allowing the case to proceed to trial [1][2]. Group 1: Legal Proceedings - Judge Jennifer L. Hall's decision allows FinancialApps' case against Envestnet and its former subsidiary Yodlee to move forward [1]. - The court appointed Chad S.C. Stover as a special master to investigate FinancialApps' allegations against Envestnet [2]. Group 2: Allegations and Evidence - FinancialApps alleges that Envestnet approached them in 2016 to license their product "Risk Insight," which assesses credit applicants for financial institutions [2]. - In 2019, FinancialApps suspected that Envestnet/Yodlee might steal their technology, leading to a cease-and-desist letter and a lawsuit claiming theft of trade secrets [3]. - FinancialApps claims that Envestnet lost or destroyed evidence that could substantiate their allegations shortly after filing their complaint [3]. Group 3: Data Management and Implications - Envestnet/Yodlee canceled their subscription to Papertrail, a logging app that could provide crucial data regarding access to Risk Insight functionality [4]. - The cancellation of the subscription led to automatic deletion of data, despite legal counsel advising retention of potentially relevant evidence [5]. - Stover's report indicated that there was no substitute for the Papertrail data, and a jury should be allowed to presume that the data would have been unfavorable for Envestnet [6].