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Court maintains XP-linked injunction on BTG Pactual, relaxes some terms

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Court maintains XP-linked injunction on BTG Pactual, relaxes some terms

A Brazilian business court maintained an injunction on BTG Pactual Digital, BTG Pactual Group's investment platform, that prevents it from approaching autonomous investment agents associated with brokerage firm XP Investimentos SA, Valor Econômico reported.

Judge Luis Felipe Ferrari Bedendi in December 2018 ruled that BTG must not approach distribution agents that are part of XP's network and refrain from encouraging independent companies that sell products available on XP's platform to break their contracts with XP. The bank was also prohibited from trying to access and use sensitive information about XP's clients.

The court injunction relates to a recent lawsuit that XP filed against BTG, accusing the bank of breaking a two-year confidentiality agreement signed when BTG was hired as an underwriter for XP's planned IPO in December 2016.

However, the judge relieved some terms in its previous decision after BTG challenged the ruling. Specifically, the judge said XP did not provide sufficient evidence showing that BTG formulated a business strategy out of confidential information from the planned IPO.

The new ruling still bans BTG from approaching the agents, although it now allows the agent to take the first step in starting negotiations with BTG. The court also prohibits BTG from offering financial gains that will attract the agent to transfer customers from XP to the bank or provide customers' confidential information.

An agent agreement with BTG would only be limited to the stand-alone agent's accounting and financial data and should not comprise access to information such as quantity of customers, volume of resources or investor profiles, Ferrari Bedendi said.

XP and BTG did not comment on the ruling, but Valor said BTG plans to appeal the injunction as it prevents the bank from adopting commercial practices used by competitors, thus placing it on a competitive disadvantage.