In the old days when a trader quit, resigned or was fired, the bosses only had a few things to worry about. The former trader would leave their experience and expertise and a 'promise' not to steal their best and most loyal clients.
Of course, the firms would then bad mouth the former trader and the trader would then try to poach their former clients for their new firm. The tide goes in, the tide goes out.
But traders are now technologists who not only know how to wheel and deal but they know the systems and often write their own formulas, Excel macros and software code. A smart and charismatic trader leaving an investment firm is fraught with more danger for their old investment firms.
[Ding! HFT firms speed up their trades via microwaves.]
The list of former traders who left their firm amid accusations of allegedly stealing intellectual property is long and storied. Goldman Sachs accused former employee Sergey Aleynikov of stealing computer code for his new job. He was sentenced to 97 months in prison before his sentence was overturned on appeal. A high-flying married couple who ran a hedge fund not only feuded over the fund, but they are fighting over the trading algorithms that led the firm to amazing profits. And the list goes on.
Now, Credit Suisse is suing a former vice president for stealing trade secrets and customer files for her new job at Goldman Sachs.
In a complaint filed in Manhattan state court, Credit Suisse said Agostina Pechi sent confidential and highly sensitive company documents to her personal email account in the months leading up to her resignation, including databases, client contact information and sales team targets.
The Swiss bank also accused her of conducting an "after-hours document raid" when she was scheduled to be on vacation in which she allegedly copied transaction documents related to a longtime Credit Suisse client.
After Pechi resigned on April 2 and told the human resources department she was accepting a new position with rival Goldman Sachs, Credit Suisse launched an investigation into her departure and found 60 work emails in her personal account, according to the filing. The next day, those emails had been deleted and could not be recovered, the complaint said.
Credit Suisse is reportedly not seeking jail time for their former employee but is seeking a limited restraining order that would keep Pechi from working for Goldman Sachs for 30 days. One can assume that this would give the Swiss bank enough time to contact all of her former clients and lock in their loyalty.
Worrying about wandering traders has been a recurring theme on Wall Street even as the firms slash their workforce with abandon. Ever since the one-two punch of the Bear Stearns and Lehman Brothers collapses started the wave of massive layoffs in the back office and then the front office, the CEOs have had a keen eye on their traders. In fact, after the investment banks were forced to take the federal TARP bailout funds and merge by government orders, the same CEOs made sure that their traders received their multi-million dollar bonuses. Why? They said their traders would start their own hedge funds if they weren’t paid.
One thing is clear: A smart trader who leaves for the competition is a very big deal. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio