A legal dispute between Janus and former portfolio manager Edward Keely took an unusual turn when a judge excluded key evidence that the company planned to rely on to fight Keely's claims.

Keely's lawyers convinced Denver District Judge John McMullen that documents in the case had been altered in a way that favored Janus.

"What I have found is manipulation of critical evidence that would have resulted in false testimony had it not been uncovered," the judge said, according to a transcript of the hearing.

The judge added: "I would find that there's very strong circumstantial evidence that this was not an innocent mistake."

Keely alleged in a lawsuit that Janus breached an agreement when it cut his pay by more than half at the beginning of 2007.

Keely said his contract had a provision that automatically renewed the terms for a new year unless the company, by Sept. 30 of the prior year, had given notice it would change the pay formula.

Janus has denied the claims. It said Keely "lost a substantial amount of the assets" he oversaw and that the company was allowed to change his pay.

Janus said in court papers that Keely is not entitled to anything more than the $2.2 million in severance benefits he received.

The firm intended to use pages from the notebook of Gibson Smith, co-chief investment officer, to show that it had indeed informed Keely about the pay cuts.

But Smith's notes detailing CEO Gary Black's comments were mixed up, with a portion removed from one notebook and attached to a page in another, the documents show. The way the notes were presented created the false impression that notice was given to managers before the end of September, Keely's lawyers said.

Janus' lawyers at Hogan & Hartson took responsibility, calling it an honest mistake.

The circumstances "obviously are regrettable and embarrassing," Ed Aro and Eric Moutz wrote in a court document, but they show "no evidence of bad faith or intentional misconduct."

Aro said by phone that their attention remains "focused on the merits of the case.

"We respectfully disagree with the court's ruling," he said. "We think the ruling was based on misapprehension of the facts, and we're confident the decision will be reversed by the trial court or by an appellate court."

A trial is set for early May.

Another former manager, Tom Malley, has sued Janus, making similar claims. The trial in his case is scheduled for April.

Keely are Malley are among more than a dozen fund managers who left Janus over a span of a couple of years. Keely argued that compensation disputes fueled many of the departures.

Janus' cuts "violated Mr. Keely's contract, destroyed morale among the portfolio managers and precipitated a flood of resignations," documents allege.

Janus has said it sought to link pay more closely to long-term performance. In a document, the firm said its managers received two to three times more than peers elsewhere and that in 2006 it began to make changes "to reduce the financial burden that paying above market wages placed on the company."