Ex-Citadel exec denies violating non-compete clause
Ex-Citadel Investment Group LLC executive Jace Kohlmeier said he doesn't believe employees of his newly formed firm are developing usable computer code for trading stock while he is bound by contract not to compete with his prior employers.
Kohlmeier testified on the fourth day of a hearing at which Citadel, manager of about $14 billion in hedge fund assets, seeks a court order forcing him and his former deputy at Chicago-based Citadel, Mikhail Malyshev, to halt work on setting up their nascent company.
"Would you have a problem with letting a competitor look at those codes?" Citadel's lawyer Michael Slade asked Kohlmeier about samples he had said weren't meant for live trading.
The president of Teza Technologies LLC replied that he would. "It's confidential information," he said.
Citadel in July sued Malyshev, Kohlmeier and Teza, claiming the men and their new company breached contracts forbidding them from competing with Chicago-based Citadel for nine months after they left.
The men resigned from Citadel in February.
Their lawyer, Chris Gair, has argued that the covenants not to compete apply only to going concerns, not to their work to set up Teza.
Judge Mary Rochford on Sept. 4 denied a defense request that she throw out the case on those grounds.
Malyshev, the new firm's chief executive officer and the former head of Citadel's high-frequency trading unit, denied his company was actively competing with the established firm when he testified earlier this week.
He told the court he and Kohlmeier built a $1 billion high- frequency trading platform at Citadel in about four years by developing computer codes that enabled them to make split-second trades based on anticipated share price changes.
Citadel is seeking an order barring the men from competing with it for the full nine-month duration of those pacts, starting from the day the order is entered.
In a separate arbitration proceeding, Citadel is seeking $300 million in damages from each of the two men and an additional $100 million from a former in-house attorney who now serves as Teza's general counsel.
Testimony before Rochford will continue today.
The case is Citadel Investment Group LLC v. Teza Technologies LLC., 09CH22478, Chancery Division, Cook County, Illinois, Circuit Court (Chicago).