(Bloomberg) — Quantlab Technologies Ltd. won $12.2 million in damages from rivals who used stolen high-frequency trading code to found SXP Analytics LLC.
Andriy Kuharsky, a Ukrainian quantitative research scientist who partly developed the code while working for Quantlab, must pay $7.2 million for stealing trade secrets and conspiracy, according to a jury verdict reached Wednesday in Houston federal court.
Emmanuel Mamalakis, the Wisconsin entrepreneur who bankrolled SXP after recruiting Kuharsky and some of his team in 2007, must pay $5 million for conspiracy and misuse of Quantlabs family recipe, jurors determined.
Quantlab reached an additional $28.5 million settlement with three other ex-employees and SXPs receiver on the eve of trial, which began May 4. Those settlements came after the judge overseeing the case ruled that Kuharsky, Mamalakis and SXPs third co-founder — Ukrainian quant Vitaliy Godlevsky — were liable on some allegations because of massive intentional destruction of computers, code files and other key evidence.
None of the defendants face criminal charges, as the Justice Department stood down after a three-year FBI investigation failed to turn up enough evidence to support an indictment.
Quantlab said going into the trial that its high-frequency trading activities account for 3 percent to 5 percent of daily trading volume on global stock and commodities exchanges where the company actively trades.
The case is Quantlab Technologies Ltd. v. Godlevsky, 4:09-4039, U.S. District Court, Southern District of Texas (Houston).
