A former Citadel Investment Group executive, Mikhail Malyshev, left Citadel to start up a high-frequency trading firm. Citadel sued. Now, Malyshev has coughed up $1.1 million in sanctions for destroying evidence.
Chicago Judge Mary Rochford ordered Malyshev to fork over the money for “scrubbing” his computers despite her order to preserve documents in the case. Malyshev trotted out the porno defense: he was only trying to destroy pornography and not any evidence related to the case. But he admitted irretrievably deleting the files protected by the judge’s order.
Judge Rochford wasn’t buying it, calling Malyshev’s actions “more egregious than anything” she had ever seen before.
“Malyshev has acted in disregard of the orderly administration of justice,” she wrote. “He improperly and significantly disrupted the discovery practice and impaired the truth-seeking process for all parties.”
Despite the harsh words, the sanction she imposed was fairly light-handed, covering only legal fees and costs. Citadel had asked for a $15 million penalty, which Rochford rejected as punitive.
At Citadel’s request, the $1.1 million has been donated to two Chicago charities. The mega hedge fund did not explain how it came to hire a trader who kept pornography on his computer.
Last October, Rochford entered an injunction against Malyshev and Jace Kohlmeier, another former Citadel high-frequency trader, barring them from working on their newly-founded Teza Technologies until their non-compete agreements expired. She also barred them from hiring Citadel employees for a year, but refused to extend the non-competes.