Hartford Business Journal

www.HartfordBusiness.com • July 27, 2020 • Hartford Business Journal 17 then they are able to successfully wring out the costs," Thind said. Over time, the deals have grown larger. The $2.6 billion Advent deal was SS&C's largest ever until 2018, when it paid $5.4 billion for DST Sys- tems, scaling up its existing offerings for financial clients as well as health- care companies — a new market. But as the two recent lawsuits against SS&C show, consolidation can lead to new frictions. Customer and competitor The civil lawsuits filed by SEI Global, a publicly traded company with an $8.4-billion market cap, and Arcesium, a private firm, stem from SS&C's $2.6 billion acquisition of California-based Advent Software. That deal cleared antitrust review from the U.S. Department of Justice in 2015, but each plaintiff argues SS&C has recently wielded its lever- age to illegally suppress competition. The lawsuits describe an uneasy dynamic in which SEI Global, Arc- esium and their clients are paying licensing fees to Advent — now owned by a competitor (SS&C) of both plaintiffs — for the right to in- corporate Advent's Geneva account- ing software into their own business process outsourcing offerings. The complaints allege that SS&C recently sought to squeeze steep price increases or other concessions from SEI and Arcesium when it was time for contract renewals, and they claim the motivation is that several of SS&C's companies, including GlobeOp and In- novest, compete for similar customers. "Between 2015 and 2019, peace between the companies still existed," SEI's complaint says. "However, SS&C decided to flex its muscles in the fall of 2019 by raising a series of disingenuous positions to gain an advantage over SEI, leaving SEI no choice but to file this lawsuit to protect itself." Arcesium says SS&C sought to im- pose a series of "predatory terms" that were "plainly impossible to accept," including forbidding Arcesium from marketing its services to customers of Advent or SS&C, as well as to fund administrators, a key target customer. Each company, which didn't com- ment for this story, also accuses SS&C, after they balked at the offers, of termi- nating their respective license agree- ments based on alleged term violations. For example, SS&C accused SEI of soliciting Advent employees in an attempt to hire them, the complaint says. Meanwhile, Arcesium's suit says SS&C claimed the company had im- properly marketed software access to customers after its license expired. Arcesium CEO Gaurav Suri wrote in a court fling that switching to a new portfolio accounting platform is "extremely expensive, time-consum- ing and disruptive," costing into the six-figures and taking at least a year to complete, and creating the risk of interruptions that could harm a customer's ability to meet collateral and regulatory obligations. "As an analogy, for hedge funds and administrators, switching portfolio accounting software is like doing a heart transplant while the patient is still trying to go about his or her daily business," Suri wrote. SS&C and its legal team, which have rejected the allegations, have not pulled any punches. In the SEI case, SS&C's lawyers have filed a motion to dismiss the suit, calling the allegations "a gar- den variety software licensing dis- pute between sophisticated parties." The attorneys argued that SEI's lawsuit "fails … to meet the most ba- sic elements of an antitrust claim." As for the Arcesium lawsuit, SS&C's Stone said in June it "boils down to unfounded complaints by a disappointed licensee who would prefer to continue to use SS&C's valuable intellectual property on terms of its own choosing." SS&C said the technology and software market for financial firms is "extraordinarily competitive" and called the notion that SS&C dominates or has monopolized the industry "preposterous." While SS&C is a dominant player in hedge fund administration, it has larger competitors in various other segments, Stone said. "We're not some goliath," he said. He also said it's fairly common in the investment software and servic- es ecosystem for companies to have customers that are also competitors, which he termed "co-opetition." "Most of the major banks are big customers of ours and they are also big competitors of ours," Stone said. "There are interconnections all over the place." Fill out the Census. Shape our future. Every year, Connecticut receives $10.7 billion in federal funds that pay for roads, schools, public works and vital assistance programs – all determined by Census data . Encourage your staff, colleagues and friends to spend ten minutes filling out the Census – it's confidential, safe and very important. my2020Census.gov SS&C, Stone may stay the course in CT S S&C Technologies Inc. has about 22,000 employees today, which is 15 times more than it had 10 years ago — growth largely spurred by an acquisitions spree. About half of those employees are based in other countries, in- cluding about 5,000 in India. SS&C's Connecticut presence hasn't seen the same explosive growth in personnel. Today, up to 450 SS&C employ- ees work in Connecticut, at the company's 93,500-square-foot Windsor headquarters and Sandy Hook office, said CEO Bill Stone. SS&C leases its Lamberton Drive headquarters in Windsor under an agreement that's set to expire in the fall of 2022. Stone, who moved to Florida in 2012, told the Hartford Courant the following year that SS&C would always have a presence in Connecti- cut, but that moving its headquarters was "more under active consider- ation than it was before." Asked about SS&C's future in Connecticut, Stone said the state's educated workforce and his com- pany's capable existing staff here are both strengths. "I don't see it particularly chang- ing," he said of SS&C's local presence. "I don't know how much we'll grow in Connecticut," he added. As for his own future as SS&C's chief executive and largest individu- al shareholder, the 65-year-old Stone said he's not going anywhere yet. "I've told our board and most of our investors that I'm going to work for another five to seven years and make a decision then," he said. He said there's a strong manage- ment team under him that could fill his shoes when the time comes. "I'm in reasonably good health and I like the challenge," he said. "I don't see me changing for a while." SS&C Technologies' Lamberton Drive headquarters in Windsor. PHOTO | CONTRIBUTED

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