The secret trading strategy in question reportedly involved options trading in India. Jane Street said the traders Douglas Schadewald and Daniel Spottiswood were “intimately” involved in developing the strategy before resigning to join Millennium.
The theft, Jane Street said, became apparent when its profit from the strategy plunged more than 50% almost immediately after the traders left
Millennium Management, one of the world’s largest hedge fund firms, is being sued by rival Jane Street Group for stealing a valuable in-house trading strategy after two of its traders defected.
The secret trading strategy in question reportedly involved options trading in India. Jane Street said the traders Douglas Schadewald and Daniel Spottiswood were “intimately” involved in developing the strategy before resigning separately to join Millennium in February.
The theft, Jane Street said, became apparent when its profit from the strategy plunged more than 50% almost immediately after the traders left and that a “new entity . . . started placing orders mirroring the trading strategy”.
Jane Street said it built the trading strategy to take advantage of inefficient markets and is reported to have earned about $1 billion from the strategy last year.
According to a Bloomberg report, lawyers for Millennium, Schadewald and Spottiswood identified the nation as India during their arguments.
The lawyers, during the hearing, pointed to media reports on how lucrative trading options in India can be, adding that Indian government has promoted opportunities for traders there.
The US judge denied Jane Street’s request for an order barring Millennium and the two traders from using the strategy, saying the firm could be compensated if it’s found to have suffered any harm. Jane Street claims it relies heavily on its intellectual property and confidentiality agreements rather than non-competition pacts because “people should be able to go somewhere else and compete, just not with their confidential information because that’s not fair.”
“They should go to another place, use their own skills, whatever they’ve developed, and come up with a different strategy, come up with their own way, not Jane Street’s strategy that they’ve invested millions of dollars into,” it said in its argument.
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