Don't see the relevance of "original" English Common Law. Non-competes are a very, very regular/common part of modern business in America. See Mark Hurd of HP, Lee Kai-Fu of Google, for the high-profile examples. It's a part of standard employment contracts for critical employees in many industries.
In what way were they "partners"? Did they have a partnership agreement? What were the contributions of each to the partnership? What was the agreement regarding profits and losses of the partnership? Was there any agreement regarding management and control of the partnership? Etc., etc. I do not understand what you mean by "minority partner." A partnership is either a general partnership or a limited partnership. It is possible a general partnership may have been contemplated if both parties were actively engaged in the business of the partnership. In a general partnership, all partners are co-owners of the business and each partner has certain fiduciary duties to the other partners, such as a duty of loyalty. If the investment advisor was formed as a nonpartnership entity, did both parties receive stock or shares in the entity? Was there an operating agreement? Etc., etc. Maybe the "minority partner" was just an employee or a general contractor who wants to argue he was a partner. Without additional facts it's impossible to say what legal remedies if any are available to the "minority partner."
The relevance is that it often guides court rulings. I haven't followed the Hurd or Lee cases, and I cannot forecast how they will get resolved. But the situation is a little different for critical employees (i.e. CEOs) and equity stakeholders. For the OP, the parties could rely on CNCs and NDAs. I believe a better plan would be for an arms-length arrangement whereby the major player keeps the investors' names secret, and the minor player keeps the source code secret. That's generally better than a partnership. When people get into these deals, it's important to know what can be protected, how well it works, and at what cost.
The investment advisor was set up as a Delaware LLC. All of the following were spelled out in the operating agreement. The guy who brought the investors was the managing member. The guy who brought the strategy was an admitted member, with no voting power over the management of the LLC. The admitted member is entitled to a set profit/loss sharing agreement of the 1/20 fees for managing investor's money. There is a provision for dissolution that gives the managing partner the right to disolve the partnership at will.
Well, there you have it. If the structure is already setup as above, then obviously all of the cards are in the managing directors' hands. If you thought you were bringing in something that was worth "half", then you got screwed. This is not an equal "partnership" in that sense. Your partner is clearly the captain of the boat. Doesn't mean you're going to get thrown overboard, depends on how the captain wants to run the ship. (And frankly, the hard part in the vast majority of cases is raising capital, not bringing the strategy... so more likely than not, it's probably fair that he's the captain.)
I was beginning to regret getting bogged down in this discussion, but now it has turned interesting again. I imagine other ETers have encountered, or will, such a situation. The big question here relates to what the "strategy" consists of and how it could have been protected. If the strategy is simply an idea, a dual exponential moving average crossover for example, the strategy has no intellectual property rights as far as I can tell. Disclaimer: I'm not an attorney. If the strategy entails computer code, then it becomes an issue of who owns the code. In the case of the OP, it looks to me like the junior member is really an employee or contractor, not an equity owner. A standard NDA would give the senior guy ownership. In the absence of an NDA, rights usually revert to the programmer. But if the programmer gives access to the program to the senior guy, he has lost control. It looks to me like the junior guy has been outmaneuvered. He might be able to fight it in court, but it's probably not worth the expense and aggravation. His mistake was giving up control.
It appears that the junior made a mistake and is paying the piper. The strategy was a fairly complex market neutral long short. Chalk up another lesson from the school of hard knocks. Thank you for your insights into this.
So what exactly is the complaint, that the terms of the agreement are unconscionable? LOL Why would the guy with the "strategy" agree to such an arrangement if he thought it was worth anything? 1/20 of the fees and no control over anything and a specific provision giving the other party sole power to end the venture at any time. The aggrieved party can claim that the managing member did not act in good faith, but that's a stretch. Besides, what is he claiming are his damages? They would be nearly impossible to prove, if he even has any.
If you are some Goldman guy or someone with pedigree groomed near some hedgie big wig, yes, you can cut yourself any deal you want. But a lot of traders are not like that. The guy with the strategy agreed to the deal in order to put some cash into his bank account which he did. Everyone has to start somewhere when they don't come into the world with a fat bank account. What is better, an unused strategy sitting on your computer or trying to make some money while the gig lasts. There is no complaint here. Perhaps just something to keep in mind in the future.
Sounds to me the guy with the strategy got the benefit of the bargain. Maybe he should be thanking the other party rather than looking for "recourse."