Inside the trade secrets lawsuit that has the alternative data industry buzzing

• Credit card data giant Yipit has accused two former salespeople of stealing intellectual property.
• The former employees took "secret information at the heart of Yipit's business" to use in their roles at MScience, Yipit says in its lawsuit.

Carlyle-backed data giant Yipit's lawsuit against two former employees — and 10 unnamed "individuals or entities who have conspired" with them — is the talk of the alternative data industry.

Alex Pinsky, who was elevated to head of sales at Yipit rival MScience this year after joining in 2022, and Zachary Emmett, who left Yipit for MScience this year to join his former colleague, stole "secret information at the heart of Yipit's business," according to the 55-page lawsuit.

The suit, filed on October 16 in the federal court in Manhattan, outlines how Emmett allegedly "texted detailed information about Yipit's customers to Mr. Pinsky, uploaded some of Yipit's most sensitive files to his personal accounts, and repeatedly took disloyal actions or inactions during his last months at Yipit." In return, the suit says, Pinsky helped Emmett get a job at Jefferies-owned MScience.

In total, Pinsky "solicited Yipit's information from Mr. Emmett, and Mr. Emmett provided it, no fewer than 18 times," the suit states.

Pinsky and Emmett, who focused on sales to Yipit's existing hedge fund clientele while at the firm, did not respond to requests for comment. A person close to MScience told Business Insider that they are no longer at the company.

Yipit and MScience declined to comment.

The suit includes screenshots of what it says were text messages between Pinksy and Emmett discussing how Yipit clients approaching renewal dates could be targeted by MScience. One alleged conversation between the two starts with them discussing an unknown hedge fund client who is "maybe the biggest a hole in the entire industry."

"Can be your first one," Pinsky wrote to Emmett, who had not yet joined MScience.

Emmett tried to conceal the transfers of Yipit's client data when he left the company, according to the lawsuit. He renamed files with titles such as "ZEtaxes2024" to hide what they actually were and uploaded them to personal devices via the messaging platforms of Facebook and LinkedIn.

"These files were among Yipit's 'crown jewels,'" the lawsuit says, including an internal presentation on the company's new Apple-focused data product that outlines Yipit's "underlying proprietary methodology."

"Notably, Competitor also offers an AAPL product and is Yipit's key competitor for this product," the suit reads, referring to MScience.

Longtime data vendors and buyers told Business Insider that the suit had stirred up the adolescent industry because of the openness of the two former employees.

"Never put this kind of stuff in writing," one data sales executive told BI.

Poaching old clients after joining a new firm is certainly not a new phenomenon in the data industry, these people said, but the fact Yipit has decided to publicly name the two former employees is proof that there is still a line in the sand, these industry players said.

"Yipit is making sure these guys don't work in alt data ever again," a data executive at a hedge fund said.