Court Denies Jane Street's Request for Restraining Order Against Millennium Management

Jane Street's bid for a restraining order against Millennium Management and former employees denied. Fierce competition in proprietary trading as firms fight to protect lucrative strategies.

Bijay Laxmi
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Court Denies Jane Street's Request for Restraining Order Against Millennium Management

Court Denies Jane Street's Request for Restraining Order Against Millennium Management

A New York federal judge has denied trading firm Jane Street Group's request for a temporary restraining order against rival firm Millennium Management and two former Jane Street employees who now work at Millennium. Jane Street had sued Millennium and the two traders, Douglas Schadewald and Daniel Spottiswood, alleging they misappropriated Jane Street's confidential and lucrative options trading strategy that earned around $1 billion in revenue last year.

In the lawsuit, Jane Street claimed Schadewald and Spottiswood took the firm's trade secrets to Millennium. Jane Street said the strategy saw a 50% drop in profits in March, which it attributed to competition from a party using the same approach. The firm sought a restraining order to prevent further alleged use of its intellectual property.

However, U.S. District Judge Paul Engelmayer rejected Jane Street's bid for a restraining order in a hearing on April 19, 2024. While acknowledging the seriousness of Jane Street's claims, Engelmayer ruled that the firm had not persuaded him that it would face irreparable harm without a restraining order. "Jane Street has certainly identified smoke, but it has not established a fire," the judge stated.

Millennium challenged the notion that Jane Street's documents contained any trade secrets or viable theory of misappropriation. The firm's attorneys argued that decreased volatility and fewer trading days, not the former employees' actions, impacted Jane Street's profits. They also suggested the supposed proprietary strategy might not be as secretive as claimed, noting the market and trading opportunities have been widely covered in the press.

Why this matters: The case highlights the fierce competition and high stakes in the world of proprietary trading, where firms go to great lengths to protect their most profitable strategies. It also underscores the challenges of proving trade secret theft and irreparable harm in fast-moving financial markets.

Judge Engelmayer declined to close the hearing to the public and press, calling Jane Street's request "borderline frivolous." He said he would order a "highly expedited schedule" for discovery ahead of a bench trial set for July 2024. Jane Street emphasized its unusual step of litigating against former employees in the absence of non-compete agreements. Schadewald and Spottiswood have denied using any of Jane Street's trade secrets in their trading at Millennium.

Key Takeaways

  • NY judge denies Jane Street's request for restraining order against Millennium
  • Jane Street sued Millennium for misappropriating its $1B options trading strategy
  • Judge ruled Jane Street failed to prove irreparable harm from alleged trade secret theft
  • Millennium argued decreased volatility, not ex-employees, impacted Jane Street's profits
  • Judge ordered expedited discovery ahead of July 2024 bench trial on the matter