Ex-Jane street traders cite pay letdown in secrets countersuit

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The two former Jane Street Group traders accused of stealing an Indian options-trading strategy for Millennium Management countersued their old firm, saying they left because they were disappointed in their 2023 pay packages.

Douglas Schadewald and Daniel Spottiswood said in counterclaims filed Tuesday in Manhattan federal court that they led the growth of Indian options trading at Jane Street from a “relatively small operation” at the beginning of the year to a highly profitable business by the end of 2023.

The pair said it was the most successful year of their careers, but that they were “disappointed with Jane Street’s compensation decisions” and “felt that they were not given a clear path to advancement within Jane Street and that their contributions to the firm were being undervalued.”

Details of the men’s compensation were redacted in the Tuesday’s filing. They both joined Millennium in February.

Jane Street sued the two men and Izzy Englander’s hedge fund group last month, saying they stole an “immensely profitable” proprietary strategy. It was later revealed in a court hearing that the strategy related to options trading in India. Jane Street initially sought an order blocking the defendants from using the strategy, but US District Judge Paul Engelmayer denied that request. It’s now seeking damages.

‘Bad Faith’

In their countersuit, Schadewald and Spottiswood are seeking a declaration that Jane Street brought its suit in “bad faith” and an order requiring the firm to cover their attorney’s fees and other costs. Millennium separately countersued, seeking a declaration that it did not steal any trade secrets.

Jane Street didn’t immediately respond to a request for comment.

Both the traders and Millennium deny that any trade secrets were at issue. Schadewald and Spottiswood said Jane Street’s description of the alleged secret “could apply to almost any trading in options on exchanges in India.” The two men said they relied on their experience as traders, rather than any “algorithms or automated signals.”

Millennium said in its countersuit that it has been trading in India for years, noting that it received regulatory approval in 2016 to hold Indian securities and other financial assets as a foreign entity. According to its filing, Millennium prohibits employees from bringing third-party confidential material into the company without a “thorough review and approval process.”

Jane Street doesn’t require employees to sign non-competition agreements, and it said in its suit last month that it had never sued a departing staffer before. Schadewald and Spottiswood said this policy created a “dilemma” for Jane Street when faced with the loss of two traders who’d generated “vast profits” for the firm.

They said Jane Street was now trying to chill competition by “sending a message to high-skilled employees that departures to a competitor will be met with legal action even in the absence of any noncompete agreement.”

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