Back in October, a former Citadel employee, Yihao “Ben” Pu, was arrested and charged with “stealing trade secrets” from Ken Griffin (by “copying company data onto a removable storage device,” and then attempting to sell it to Teza Technologies AKA the firm a bunch of ex-Citadel guys tried to join in 2009 before being sued for doing so by Griffin, as well as the the shop a former Goldman programmer, Sergey Aleynikov, went to jail for after giving it proprietary GS code). Now, because apparently people just can’t help themselves, KG has been forced to levy another allegation of theft against some former employees who he believes took a piece of his property when they left for high-frequency trading firm Jump Trading. Does Griffin have actual evidence that they swindled him? No, not exactly. But he’s got a hunch, and that hunch is based on the fact that since 2005, when people from Citadel’s “tactical trading group” started leaving for Jump, “some of the strategies” employed by the TTG “have become less profitable” and are “behaving in a way consistent with their having been copied by rivals.”

So what KG would like a court to do is force Jump to turn over “personnel documents, strategy and trading records, and source code,” which will prove him right and the Citadel defectors to be the pillagers he knows they are.  Evidence in hand, Griffin will then sue Jump and everyone named Ken Griffin will go home happy. The only issue that needs to be worked out is Jump Trading’s cooperation, which so far is proving difficult to obtain. In fact, the firm is being downright unhelpful and not only that? Its legal team has accused Ken of being the thief, or at least trying to be. That’s right: the way JT sees it, Citadel’s new algorithm development system is a two-step process that goes something like this:

Step 1: Steal successful algorithms from rival firm.

Step 2: Use them.

In its response filing, Jump said that Citadel had no evidence that the algorithms had become less profitable because of any of Jump’s actions. It said that any of the hundreds of other algorithmic trading firms could be at fault. “The petition is nothing more than a transparent attempt by Citadel to obtain a competitive advantage by gaining access to Jump’s proprietary and confidential trading strategies,” Jump’s motion said.

Your move, KG.

Citadel Accuses Jump Employees Of Stealing Secrets [Reuters]

23 comments (hidden to protect delicate sensibilities)
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Comments (23)

  1. Posted by CoveredLong | June 5, 2012 at 1:44 PM

    No one's more suspicious of a cheater than a cheater.

    …then again, Ken's rubber and they're glue, so whatever they say bounces of him and sticks to them. Tough call, this one.

    -Someone who didn't go to law school

  2. Posted by The Truth | June 5, 2012 at 2:00 PM

    I would like to steal the code for the inverse 2008 Citadel algorithm

  3. Posted by Indubitably | June 5, 2012 at 2:08 PM

    See, we are just as important as any banker or trader.

    -Everyone in IT

  4. Posted by EMH | June 5, 2012 at 2:08 PM

    you mean to tell me a market beating investment strategy has failed to persist indefinitely? I'm not buying it.

  5. Posted by Herb Schmertz | June 5, 2012 at 2:13 PM

    Another accusation? Something smells funny, Ken.

    -Ben Pu

  6. Posted by Guest | June 5, 2012 at 2:17 PM

    One optical disk: $1.99.
    Additional IT programming overtime required to provide Citadel with source code: $2,800.
    The chance to infect Citadel's network with a virus that displays "Fuck You Ken": Priceless.

  7. Posted by Guest | June 5, 2012 at 2:23 PM

    Or if you had the original code, you could just switch the signs of all the numbers.

    -Ghost of Lehman quant

  8. Posted by Rival firm | June 5, 2012 at 2:29 PM

    If (deterioration in profitability) plus (employees went from your firm to a rival firm) is sufficient grounds for obtaining access to the rival firm's source code, there's going to be a lot of lawsuits flying around. Citadel itself could be a target. Does KG really want to go there?

  9. Posted by tHe oTher JD | June 5, 2012 at 2:39 PM

    Step 1: Steal successful algorithms from rival firm.

    Step 2: Use them.

    Step 3: ?

    Step 4: Profit!

  10. Posted by ILoveLamp | June 5, 2012 at 2:42 PM

    "When I steal a profitable trading algorithm, it's supposed to stay stolen."

    -Ken "Damon" Griffin

  11. Posted by Not Me | June 5, 2012 at 2:52 PM

    say = alpha

  12. Posted by Hakuna Matata guy | June 5, 2012 at 2:54 PM

    About a year ago, I noticed that my proprietary schtick was evoking fewer and fewer "likes", from which I concluded that someone else had stolen my schtick and was using it in the comments section.

  13. Posted by Medallion | June 5, 2012 at 2:57 PM

    Why not?


  14. Posted by guest | June 5, 2012 at 3:02 PM

    the algorithm: buy DOW, collect dividend, repeat x 100+ years

  15. Posted by Prince | June 5, 2012 at 3:08 PM

    Game blouses.

  16. Posted by CoveredLong | June 5, 2012 at 3:09 PM

    Oh well, hakuna matata.

  17. Posted by P. Venkman | June 5, 2012 at 3:12 PM

    Keep away from me Ken!!!

  18. Posted by Bernie M | June 5, 2012 at 3:47 PM

    Ken don’t have to come after me.

  19. Posted by Ken's Mom | June 5, 2012 at 8:17 PM

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    "Matthew Andresen, Jason Lehman and Neil Fitzpatrick, three former traders at Chicago hedge fund Citadel Investment Group, have joined forces once more to run Headlands Technologies, their own computer-driven trading firm. According to the Wall Street Journal, Headlands Technologies will use a quantitative-trading operation, and while its focus has not been finalized, the trading firm may eventually trade in stocks, options and futures markets "

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