U.S. District court in Philadelphia has granted a preliminary injunction request by Tacoma’s Frank Russell Company that will allow Russell to continue to use the services of an investment manager who is in a non-compete dispute with a Boston company.

Although the Boston company—Wellington Management—is appealing the injunction, the ruling decides for now a case begun in 1996 when Arnold Schneider, an investment manager and partner, was fired from Wellington. He had managed some assets in four Russell funds andcontinued to do so after forming his own advisory firm, Schneider Capital Management.

Wellington officials contend that violates a non-compete covenant Schneider had signed with them. Russell disagrees.

“We must be able to select the managers we feel best serve our clients and their investors,” said Randy Lert, chief investment officer at Russell. “We don’t feel this employment dispute should be resolved with a court decision that undermines our core business practice and compromises our duty as a fiduciary.”

Although Schneider is only one of 96 fund managers for Russell, he is a good manager who provided an asset allocation mix the company wanted to keep, said Deedra Walkey, associate general counsel for Russell. Schneider manages more than a billion dollars for Russell.

Walkey said Russell also wanted to avoid setting a precedent.

“In our experience it’s a new issue,” she said. “We knew there were non-competes, but we had never had one like this enforced against us.”

She said Russell officials don’t know why Wellington chose to attempt to do so in this case.

Besides Wellington’s appeal of the injunction that Russell won, the case is complicated by an injunction against Schneider that was issued by a Massachusetts court. Walkey said it could be several months before final decisions are reached in that case.

As a manager-of-managers firm with $40 billion in multi-manager investment funds, Russell researches and then selects from among approximately 1,800 investment management firms those it wants to handle its series of funds. The company says it relies on its manager research and selection capabilities to serve retainer consulting clients representing $1 trillion in assets worldwide.

For only the third time during the 1990s, the Frank Russell Company’s stock indexes posted first quarter total returns in double digits.

Large cap stocks led the advance as the Russell 1000 (R) Index set 24 record highs during the quarter, finishing with a 13.4 percent total return. Small cap Russell 2000 (R) Index saw nine record highs during the same period, finishing with a total return of 10.1 percent.

By Janice Smith, Business Examiner staff