Brokerage firm BTIG LLC accused StoneX Group Inc., a rival brokerage and investment bank, of stealing its proprietary software code in what its lawyers describe as “one of the greatest financial-industry trade secret frauds in recent history.”
BTIG made the claim in a lawsuit filed late Monday in California state court and seeks at least $200 million in damages.
BTIG is an investment bank and trading firm, with expertise in trading stocks for institutional clients, including foreign stocks and ETFs. In 2020, according to the lawsuit, StoneX set out to build its own equities market-making business. But to do so, the firm recruited several key BTIG traders and software developers.
Some of them stole BTIG’s proprietary computer code and took it with them to StoneX, according to the suit. BTIG accused its rival of lying about the misconduct even when confronted with evidence.
Representatives of StoneX didn’t immediately respond to a request for comment outside regular business hours.
StoneX first hired former BTIG trader Chris Amato in December 2020, according to the suit. Then, BTIG alleges, StoneX poached five more trading and software developers from the brokerage: Debayan Bhaduri, Evan Pfeuffer, John Leung, Anthony V. Centrella, and Jyoti Bhangale.
BTIG discovered the misconduct in January 2023 when it came across a lawsuit between StoneX and one of its former employees. In this lawsuit, a StoneX engineer alleged that StoneX’s computer code was copied from BTIG and still contained references to the brokerage and even the name of a BTIG employee.
BTIG said at least one of the employees who left for StoneX encrypted BTIG’s proprietary code and sent it to themselves in emails with innocuous PDFs attached, to fool the brokerage’s monitoring systems. BTIG quotes in the complaint from text messages between Pfeuffer, who had just quit BTIG, and a StoneX engineer.
“yeah, hidden encrypted payload appended to pdf,” Pfeuffer wrote, according to the lawsuit. “I’ve got mine prepared going to test tomorrow, keep it. Secret, keep it safe.”
Two days later, Pfeuffer sent another text to his new colleague at StoneX. “The eagle has landed, code extracted.”
The case is BTIG LLC v. StoneX Group Inc., California Superior Court, San Francisco County.