(Bloomberg) -- Two former Jane Street Group traders denied the firm’s allegation that they stole a confidential and “immensely valuable” proprietary trading strategy to use in their new jobs at Millennium Management.

Jane Street last week sued Douglas Schadewald and Daniel Spottiswood along with Millennium. According to the Manhattan federal court suit, the traders were “intimately involved” in the development of the strategy and are now using it at Izzy Englander’s hedge fund group.

Schadewald and Spottiswood said in a Thursday letter to the judge in the case that “they have not used any even arguable trading secret of Jane Street in their trading at Millennium.” The letter was submitted as part of the pair’s opposition to Jane Street’s request for an order blocking them from using its trade secrets. Millennium filed a similar letter. 

The description of the strategy was heavily redacted in Jane Street’s complaint, and Schadewald and Spottiswood’s opposition was filed under seal. Moreover, Jane Street has requested that a Friday hearing on the matter before US District Judge Paul Engelmayer be closed to the public. 

But Schadewald and Spottiswood hinted that they may be arguing that Jane Street’s secret strategy wasn’t all that secret. 

Jane Street “has failed to identify any confidential, proprietary, or trade secret information, and in fact information related to the specific market and trading opportunities at issue have been the subject of significant press coverage for over a year,” the two wrote. 

In its letter, Millennium said it “disputes that Jane Street’s papers contain any trade-secret information or that Jane Street has articulated a viable trade-secret misappropriation theory.” 

Though trade secrets theft suits have become commonplace on Wall Street, Jane Street said in its suit it had never before sued former employees and didn’t require them to sign non-competition agreements. But it said Schadewald and Spottiswood violated confidentialty agreements they signed.

Jane Street also argued that action was necessary in this case due to the “severe and immediate harm” it was suffering. The firm said it had seen a 50% drop in profits from using the strategy in March that could only be attributable to “the entrance of a competitor using the same strategy.”

Schadewald and Spottiswood said Jane Street was trying “to avoid competition from its former employees — who were not subject to a non-compete agreement, who are not using plaintiff’s confidential information, and who are simply practicing their profession.”

Jane Street said it spent “years of time and capital” to identify the strategy. According to the suit, Millennium offered Schadewald millions of dollars in above-market compensation “so it could avoid the risk, time, and expense of independently developing its own successful trading strategy” and gain “an enormous windfall at Jane Street’s expense.” 

The case is Jane Street Group LLC v Millennium Management LLC, 24 cv 02783, US District Court, Southern District of New York (Manhattan).

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