Fraud can be financially devastating to a business, leading to overwhelming damage in a very short amount of time. When a company suspects fraudulent activity—whether from competitors, partners, or other internal actors—swift action is absolutely essential. One of the most potent tools that can be used i is the face of this type of emergency is a Temporary Restraining Order (TRO). When deployed quickly, this legal action can put an immediate halt to potentially fraudulent transactions and preserve assets and the status quo while further investigation is pursued.

A Temporary Restraining Order is an emergency injunction that’s issued by a court in response to a petition. If granted, it prohibits specific actions for a limited time period. Unlike standard litigation that can take months or years, a TRO can generally be handed down within days— and sometimes in hours—if the plaintiff can demonstrate the risk of immediate and irreparable harm.

TROs are used in all types of situations, but they are especially effective against business fraud. Examples include:

• Misappropriation of Trade Secrets: When a former employee or business partner begins using a company’s proprietary information, a TRO can immediately prohibit further use or disclosure while the case proceeds.
• Asset Dissipation: If company funds are being diverted or corporate assets sold fraudulently, a TRO can freeze accounts and prevent transactions, preserving resources that might otherwise disappear.
• Deceptive Practices: False advertising or trademark infringement by competitors can cause market confusion and loss of profits. A TRO can stop the deceptive conduct before more damage is done.
• Breaches of Fiduciary Duty: When corporate officers make decisions that benefit themselves at the company’s expense, a TRO can suspend their authority.

Having a TRO approved by a judge in fraud cases is not as easy as simply requesting one. To prevail, a business has to show:

• Evidence suggesting fraudulent activity
• Immediate and irreparable harm if the activity continues
• A likelihood of success on the merits of the underlying case
• That the balance of hardships favors the requesting party

To ensure that the party being restrained doesn’t suffer monetary damage if the TRO is found to have been wrongfully issued, courts generally require the petitioner to post a bond that can be used to compensate them.

Beyond immediately halting fraudulent activity and preventing further financial loss, TROs have a few other advantages. They stop evidence from being destroyed, and sometimes have the advantage of making the opposing party choose to negotiate rather than engaging in extended and expensive litigation. They also calm stakeholders by showing that the company is taking action to protect their interests.

While TROs generally only last 14-28 days—they provide breathing room to file a claim for more permanent relief and develop a comprehensive legal strategy. If you need assistance with stopping fraud in your business, contact us today to set up a time for us to discuss your situation.