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Citadel Joins The Program Trading Industrial Espionage Fray, Sues Malyshev And Teza
The gloves are now completely off in the escalating program trading fiasco that was started by Goldman's former Sergey Aleynikov. Oddly, while Zero Hedge was fully expecting the Teza injunction to come from Goldman, it seems Griffin was more than happy to burden himself with that task. Hopefully Citadel is not faced with a case of reverse discovery and forced to document the 40% returns that it generated compliments of Malyshev when all its other groups on average lost around 50% in 2008. From Bloomberg:
Citadel Investment Group LLC, the $12 billion hedge fund firm founded by Ken Griffin, sued three former executives and the firm they founded, Teza Technologies LLC, claiming violation of non-competition agreements.
“This is a case of industrial espionage,” Citadel said today in a 25-page complaint. The firm seeks a court order barring the individual defendants from conducting any business through Teza or related entities that compete with Citadel, for the duration of the agreements.
Teza described itself in a July 6 e-mail as a “formative” firm that is neither trading nor investing. Named after a river in western Russia, the Chicago-based firm was co-founded by Misha Malyshev, Jace Kohlmeier and Matt Hinerfeld. All were named in the complaint.
“We didn’t violate any non-competes,” their attorney Chris Gair said today in a telephone interview. He said his clients took no trade secrets from Citadel.
Malyshev worked at Citadel for almos six years and until February was its head of high-frequency trading.
He was on the team that ran a $1.8 billion tactical trading fund that uses computer model to make trades every few seconds. The fund climbed 40 percent last year, while its main funds tumbled 55 percent.
U.S. agents arrested ex-Goldman Sachs Group Inc. computer programmer Sergey Aleynikov on July 3, one day after he started working for Teza, on charges he stole trading software from Goldman.
Teza said in the July 6 statement it suspended Aleynikov without pay after the arrest. The firm said it learned of the allegations on July 5.
“It had nothing to do with us,” Gair said of the Aleynikov matter.
The case is Citadel Investment Group LLC v. Teza Technologies LLC., 09CH22478, Chancery Division, Cook County, Illinois, Circuit Court, (Chicago).
Zero Hedge is currently going through Chancery Court filings and will present when and if it discovers anything perticularly juicy.
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Nothing to add (or take away) other than that the CAPTCHA is
"zero - zero = "
Should I take this as a sign from the gods, or do you have an infinite number of monkeys with an infinite number of calculators making these up between Shakespeare sonnets?
Yet another day of wildebeast herding.
Don't really know how all these micro-trading, high frequency programs are supposed to work.
All I know is that trading today has now morphed into a single dimensional theme.
Risk is in. Inflation is in.
or
Risk is out. Deflation is in.
They might as well do away with 75% of the stocks on the NYSE.
Because most of them trade tick for tick in exact lockstep, like Chinese soldiers marching in Red Square.
Like yesterday, EUR/USD was down, dollar was up, and bonds were up. That immediately triggered panic selling in XOM, SLB, NEM, FCX, POT, FWLT, BTU, USO, GLD, DBA and everything else.
Today was the opposite.
Bloomberg claims that "risk is in", ergo, all those same stocks sold yesterday were bought today.
Makes no difference, all those stock charts are identical. Exactly. You could buy an oil stock, coal stock, infrastructure stock, gold stock, ag stock, it doesn't really matter. They all move the same.
In fact, the entire SPY is also starting to morph into either an "inflation" play or a "deflation" play.
Every Robot Trader is playing the same stocks.
Every hedge fund trader is either looking over the shoulder to see what the other 9999 hedge funds are doing, or tweeting with his trading buddies and exchanging tips on what's hot and what is not.
Seems that the entire global casino is now linked together. Every major trading desk is now connected via a circuit cable, and all those circuit cables lead up river and eventually lead to Colonel Kurtz.
Who is Colonel Kurtz? Goldman Sach's Prop Desk.
Interesting that CNBC just broke the news on Citadel that Zero Hedge posted an hour ago. I thought MC Carbrerra was going to pop a button on her red sweater, she was so excited. My guess is that they search Zero Hedge for news of relevance, since their own staff, has their hands tied by the advertisers.
Yes, it was kind of like the "Cool Hand Luke" carwash scene.
Lucille