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A judge in Manhattan on Friday declined to issue a temporary restraining order against Millennium Management after Jane Street demanded the hedge fund stop using a secretive international options scheme that the high-speed trading firm counts as one of its most lucrative strategies.
US district judge Paul Engelmayer said Jane Street had not demonstrated irreparable harm since two of its former employees, Douglas Schadewald and Daniel Spottiswood, defected in February to Millennium.
Jane Street last week filed a lawsuit against the hedge fund, Schadewald and Spottiswood over the strategy, which attorneys for Millennium and the two traders on Friday said was focused on the options market in India. Jane Street sought a restraining order to stop Millennium from using the strategy or misappropriating any other trade secrets while the case proceeds.
“Jane Street has certainly identified smoke, but it has not established a fire,” Engelmayer said during a court hearing.
Jane Street and Millennium did not immediately respond to requests for comment.
In previous filings, which were heavily redacted, Jane Street had tried to make the case that its undisclosed strategy needed to be kept as secret as possible. The firm went as far as asking Engelmayer to close Friday’s hearing to the public and the press, but the judge declined to do so, calling the request “borderline frivolous”.
Jane Street’s lawsuit alleges the two former employees who moved to Millennium stole trade secrets by employing a similar strategy it developed in 2023, halving its profits from trading on the strategy. An attorney for Jane Street told Engelmayer that the firm had invested “tens of millions of dollars” into the development of the trading scheme.
Attorneys for Millennium and the two traders argued that the hit to Jane Street’s profits appeared to result from outside factors such as decreased volatility and fewer trading days.
Millennium in a written rebuttal this week also said that Schadewald and Spottiswood were not using any of Jane Street’s secret strategies: “They are simply applying their knowledge and experience to trade in a market where Millennium and its affiliates have long been engaged in trading activity (including in options) and has established relationships with relevant brokers and other third-parties.”
Founded in 2000, Jane Street has grown into an increasingly powerful trading firm and market maker for the $8.9tn US exchange traded fund industry. The firm has said it has never sued a former employee before this lawsuit.
Millennium, which was founded in 1989 by Izzy Englander, has grown to become one of the most prominent multi-manager hedge funds in the world, with about $63bn in assets under management and average returns of about 14 per cent a year.
Engelmayer said he expected to set a trial in the case for the week of July 15.