NetSpend Corp. has filed a lawsuit against two of its founders and their new companies, MPowerVentures LP and MPower Labs Inc., for allegedly taking knowledge developed at NetSpend to the competing companies. The Austin, Texas-based prepaid card provider filed the lawsuit Aug. 4 in the District Court of Travis County, Texas. NetSpend officials allege in the lawsuit that Rogelio Sosa, one of NetSpend's founders and a former CEO and director of the company, "used knowledge and confidential information he obtained in his roles at NetSpend to create the MPower Entities, which now are competing with NetSpend's business." NetSpend also calls his actions a "breach of fiduciary duty." It also alleges Bertrand Sosa, also a former NetSpend director, and Rogelio Sosa are likely to disclose confidential information from NetSpend's business and try to hire NetSpend employees for MPower. In addition, the suit alleges that MPower encouraged and benefited from the Sosas' actions. The suit asks for injunctions against the former employees and MPower to prevent them from disclosing confidential information relating to NetSpend and making employment offers to NetSpend employees. NetSpend also seeks actual and punitive damages and court costs. "The real issue is the duties which they owe the other stockholders of NetSpend not to misappropriate the trade secrets and confidential information of NetSpend to set up their own competitive independent business," Chris Brown, NetSpend corporate counsel, tells CardLine sister publication Prepaid Trends. In a response filed Aug. 22, the defendants deny the accusations and say NetSpend knew Rogelio Sosa would try to create a financial-services company and that his agreement not to compete expired May 7. Bertrand Sosa tells Prepaid Trends he and his brother Rogelio are the largest individual shareholders in NetSpend and have a strong personal attachment to that company, so they would not do anything to harm the business. "We want to see it grow and succeed to its fullest extent," Bertrand Sosa says.
