Citadel Says Other Firm’s Profit Shows Strategy Theft

Reuters/Brendan McDermid

The Wall Street Journal – By Juliet Chung  June 4, 2012

Citadel LLC, the money manager run by Ken Griffin, has held up a division’s shrinking profit as evidence that a fellow Chicago-based investment firm stole some of its proprietary trading strategies.

Citadel said in a court filing that Jump Trading LLC, a high-speed-trading firm, had recruited and hired at least 10 employees of its Tactical Trading business since 2005. Since then, Citadel said, its strategies in the area have become less profitable.

Citadel’s Tactical Trading business uses mathematical and statistical models to identify fleeting price patterns and anomalies in the market, aiming to profit through rapid-fire trades. The unit pulled in about $1 billion for Citadel in 2008, during the height of the financial crisis, proving a profit engine for the firm during a year when its better-known hedge funds were hit hard by losses.

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