Millennium Management, one of the world’s largest hedge fund firms, was sued on Friday by rival Jane Street Group, which accused it of stealing a valuable in-house trading strategy after two traders defected.
Jane Street said the traders Douglas Schadewald and Daniel Spottiswood had been “intimately” involved in developing the strategy before resigning separately to join Millennium in February.
It said the theft became apparent when its profit from the strategy plunged more than 50% almost immediately after Schadewald left. Jane Street said it built the trading strategy to take advantage of inefficient markets.
The lawsuit seeks compensatory and punitive damages for causing “severe and irreparable” harm” through the “egregious misappropriation” of closely guarded trade secrets, which allegedly violated the traders’ confidentiality agreements.
Millennium manages more than $63 billion of assets and is led by Israel Englander, known as Izzy, who is worth $12.4 billion according to Forbes magazine.
The New York-based firm did not immediately respond to requests for comment. Schadewald and Spottiswood are also defendants. Jane Street is based in New York.
Lawsuits alleging trade secret theft are common in the financial services industry, though Jane Street said Friday’s lawsuit was its first against a former employee.
The firm employs more than 2,600 people, about half as many as Millennium.
Former employees have included Sam Bankman-Fried, the now-convicted founder of the bankrupt FTX cryptocurrency exchange.
Englander founded Millennium in 1989 with about $35 million, Forbes said.
The case is Jane Street Group LLC v Millennium Management LLC et al, U.S. District Court, Southern District of New York, No. 24-02783.
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