Ex-Citadel Exec. Says Accused Goldman Thief Fired

Oct 5 2009 | 2:19am ET

A former Citadel Investment Group executive had denied that his new firm is competing with his old one, and said that an employee arrested for allegedly stealing proprietary computer code from Goldman Sachs has been fired.

Jace Kohlmeier, who founded trading firm Teza Technologies alongside former Citadel high-frequency trading group chief Misha Malyshev, said that Sergey Aleynikov, who was arrested in June for the alleged Goldman theft, no longer works at Teza. In a hearing stemming from a lawsuit filed against him and his partner by Citadel, Kohlmeier said Aleynikov, who was suspended in the wake of his arrest, had been fired for refusing to cooperate with the firm in its battle with Citadel. The Chicago hedge-fund giant alleges that Kohlmeier and Malyshev’s work at Teza violates their non-compete agreements, which pay the men $30,000 and $21,000 per month, respectively.

But Kohlmeier said nothing being done at Teza could be called competition with Citadel. The president of Teza, he said he does not believe the firm’s employees are developing usable systems for trading stocks. But the accused “industrial espionage” artist said he still wouldn’t want anyone to have a peek at that code.

“Would you have a problem with letting a competitor look at these codes?” Citadel’s lawyer asked Kohlmeier.

“It’s confidential information,” he replied.

The hearing, in Chicago state court, is set to continue today.

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