A quant fund sued a “special” trader in London to prevent him from joining a rival firm too soon, to protect secrets that are the “lifeblood of its business” and worth hundreds of millions of dollars.
(Bloomberg) — A quant fund sued a “special” trader in London to prevent him from joining a rival firm too soon, to protect secrets that are the “lifeblood of its business” and worth hundreds of millions of dollars.
Allowing Damien Couture, who left Jump Trading Group in March last year, to leave the firm to join a hedge fund risks “abuse of confidential information” and “once the cat is out of the bag there is no stopping” him, James Laddie, a lawyer for Jump said in the UK High Court on Friday. He should be blocked from joining Verition Fund Management until April 2024, he argued.
Jump, which is demanding two years of gardening leave and job restrictions for the trader, is applying the non-compete clause too widely and it isn’t enforceable by law, attorneys for Couture and Verition said in separate court filings.
The court on Friday refused Jump’s request to immediately stop Couture from joining Verition until a trial but agreed to order an expedited trial.
The lawsuit underscores the clamor for talent when it comes to algorithmic trading where secrets are fiercely guarded and firms will go to extreme lengths to protect. Courts in London have hosted funds quarreling over traders and their closely held trading strategies, which they argue can’t be unseen.
Couture joined Jump in 2016 to lead the adaptation of his successful high-frequency trading strategies to medium and low-frequency trading. He was “a bit special” and was “extremely well” remunerated, Laddie said in court.
Couture started at Jump with a base salary of £175,000 ($219,180) a-year, a starting bonus of £350,000 and a minimum guaranteed bonus of £500,000, which was higher than normally offered to quantitative researchers at the time, Jump’s lawyers said.
Jump’s non-compete covenants are unreasonable and “too wide to be enforceable,” Couture’s lawyer said. After quitting in 2022, Couture had told Jump about his intention to join Verition in November but later agreed to push his start date to April 2023.
This is the first time any court in the world has been asked to decide on such a “unique “ restrictive clause, which gives the employer the discretion on the duration of a cooling off period, according to Adam Solomon Verition’s lawyer.
“The more unusual the covenant is, the less likely it is to be reasonable,” he said.
Jump’s lawsuit is “confused,” over the top and its inducement claim against Verition are “bound to fail,” the hedge fund’s lawyers said in court filings. Couture has already served 12 months of gardening leave and keeping him out of the market for two years is “obviously excessive and goes far beyond the period necessary” to protect Jump’s confidential information.
Jump and Verition didn’t immediately respond to requests for further comment and Couture didn’t answer a message sent on LinkedIn.
(Updates with court ruling in the fourth paragraph)
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