Fishkin v. Susquehanna Partners, G.P. (563 F. Supp. 2d 547, 2008)

United States District Court for the Eastern District of Pennsylvania 2008-06-17

Citations

Full opinion text

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This case arises from a dispute between a securities trading firm, Susquehanna International Group, LLP (“SIG”), and two of its former employees, Cal Fishkin and Igor Chernomzav.

Fishkin and Chernomzav left SIG and formed a joint venture called TABFG, LLC (“TABFG”) in partnership with another company, NT Prop. Trading, LLC (“NT Prop”). Fishkin and Chernomzav began this action by seeking a declaratory judgment to declare invalid the covenants not to compete that were part of their employment contracts with SIG. SIG, in response, filed a counterclaim against Fishkin and Chernomzav for breach of the covenants and for tortious interference, conspiracy, misappropriation, and conversion. These latter claims were based on the allegation that Fishkin and Chernom-zav had used SIG’s proprietary trading formula, called either the “Dow Fair Value formula” or “SIG’s Dow Fair Value formula,” in their competing joint venture. SIG also impleaded TABFG and NT Prop as third-party defendants to all claims except those for breach of contract.

The Court held a bench trial from April 23 to April 26, 2007, on SIG’s counterclaims against Fishkin, Chernomzav, TABFG, and NT Prop. This Memorandum and Order constitutes the judgment of the Court.

The Court finds for the counterclaim defendants on SIG’s claims for misappropriation of trade secrets, conversion, and civil conspiracy because the Court finds that SIG has failed to meet its burden of proving the existence of a protected trade secret. The Court finds in favor of defendants Fishkin, Chernomzav, and TABFG, but against defendant NT Prop, on SIG’s claims for tortious interference with contract. Because SIG cannot establish its actual damages from NT Prop’s tortious interference, the Court awards SIG only nominal damages on this claim. The Court declines to award punitive damages on this claim.

I. Procedural History

This suit began with a complaint filed in the Court of Common Pleas of Montgomery County, Pennsylvania by Fishkin, Chernomzav, and a third employee of SIG, Francis Wisniewski, against SIG. The suit sought declaratory and injunctive relief to invalidate restrictive covenants not to compete in Fishkin, Chernomzav, and Wis-niewski’s employment contracts with SIG. The suit also alleged that the plaintiffs had been fraudulently induced to enter those contracts.

SIG answered the complaint by filing a counterclaim against Fishkin and Cher-nomzav, but not Wisniewski, for breach of their employment contracts, misappropriation of trade secrets, conversion, tortious interference with contract, and civil conspiracy. SIG also brought claims for misappropriation of trade secrets, conversion, tortious interference with contract, and civil conspiracy against third-party defendants TABFG, NT Prop, and Richard Pfeil, who was one of the principals of NT Prop.

NT Prop and Richard Pfeil then removed the case to this Court. SIG filed a motion for a preliminary injunction, seeking to enjoin Fishkin and Chernomzav from competing with SIG in violation of the restrictive covenants in their employment agreements. After a hearing, the Honorable James McGirr Kelly issued a Memorandum and Order on September 16, 2003, granting SIG’s request for preliminary relief and enjoining Fishkin and Chernomzav from violating the covenants not to compete. The case was subsequently transferred to this Judge on March 16, 2005.

In a Memorandum and Order dated May 2, 2005, the Court granted defendant Richard Pfeil’s motion to dismiss all claims against him. In a subsequent Memorandum and Order dated May 31, 2006, the Court granted SIG partial summary judgment, making permanent the previously-granted preliminary injunctive relief enforcing the restrictive covenants against Fishkin and Chernomzav and dismissing Fishkin and Chernomzav’s claims for fraudulent inducement against SIG. On February 12, 2007, the Court issued a Memorandum and Order denying the parties’ cross-motions for summary judgment on SIG’s claims. On March 19, 2007, the Court denied a motion in limine by counter-claim defendants Fishkin, Chernomzav and TABFG to limit the damages available to SIG on its counterclaim for misappropriation of trade secrets.

The parties having waived their rights to a jury trial, the Court held a bench trial from April 23 to April 26, 2007, on the remaining claims in this case. The claims tried to the Court were SIG’s counterclaims for:

1) Misappropriation of Trade Secrets against Fishkin, Chernomzav, TABFG, and NT Prop (Count II of the Amended Counterclaim);

2) Conversion against Fishkin, Cher-nomzav, TABFG, and NT Prop (Count III of the Amended Counterclaim);

3) Tortious Interference with Contract against Fishkin, Chernomzav, TABFG, and NT Prop (Count IV of the Amended Counterclaim); and

4) Civil Conspiracy against Fishkin, Chernomzav, TABFG, and NT Prop (Count V of the Amended Counterclaim).

SIG seeks punitive as well as compensatory damages for these claims.

II. Findings of Fact

A. General Background

(1) Futures Contracts

1. A future is a type of derivative. A derivative is a security whose value is based upon, or derived from, another underlying security or other asset. A future is a contract to buy or sell a particular commodity at a specific price at a specific time in the future. The commodity at issue may be an agricultural product, like wheat or orange juice, or it may be a basket of stocks. The date a future comes due is called its expiration date. 4/24/07 p.m. Tr. at 17-18.

2. The relevant futures in this case are futures in the Dow Jones Industrial Average (referred to as “Dow Futures”) and in the Standard & Poor’s (“S & P’s”) 500 Index (referred to as “S & P Futures” or “SPU” or “SPU Futures”). These futures are, respectively, contracts to buy or sell the underlying stocks in the Dow Jones Industrial Average or the S & P 500 Index at a specific price on a specific expiration date. 4/24/07 p.m. Tr. at 17-19.

3. Because Dow Futures and S & P Futures involve baskets of stocks, rather than physical commodities, no actual exchange takes place on the expiration date. Instead, the expiration date for index futures like these is a clearing transaction in which the exchange fixes a price to settle all outstanding contracts and profit and loss are transferred. 4/24/07 p.m. Tr. at 41-43.

4. Futures contracts are not valued in dollars, but rather in points. The transactions at issue in this case involved two different types of Dow Futures and two different types of S & P Futures, each with a different point valuation. The trading in Dow Futures involved trades in both “Dow Big” and “Dow Mini,” and the trades in S & P Futures involved trades in both “SPU Big” and “SPU Mini.” A point in a “Dow Big” contract was worth $10 and a point in a “Dow Mini” contract was worth $5. A point in a “SPU Big” contract was worth $250 and a point in a “SPU Mini” contract was worth $50. For purposes of comparing trades in Dow Futures to trades in S & P Futures, trades in Dow Minis can be converted into their equivalent in Dow Bigs by dividing by two, and trades in SPU Bigs can be converted into SPU Minis by multiplying by five. 4/24/07 a.m. Tr. at 13; 4/25/07 p.m. Tr. at 12.

(2) Trading in Futures

5. Traders like SIG and TABFG seek to make money by profiting from mispric-ing in the value of a security, a difference in the current price for a security and the price at which the trader believes it should be trading. Traders can make money whether a security is underpriced or overpriced. If a trader believes a security is underpriced, it can buy the security and wait for the price to rise before selling. This is referred to as taking a “long” position or “going long.” If a trader believes a security is overpriced, it can sell that security and wait for the price to fall before buying it back. This is referred to as a “short” position or “selling short.” 4/24/07 p.m. Tr. at 20-21, 23-24.

6. “Edge” is a term of art that refers to the difference between the price at which a securities contract was purchased and the price that a trader thinks it is worth. “Edge” can be positive (profit) or negative (loss). Traders look for positive edge on every trade. 4/24/07 a.m. Tr. at 90; 4/24/07 p.m. Tr. at 21; 4/25/07 a.m. Tr. at 35-36.

7. Futures are traded on exchanges. These may be physical locations, like the Chicago Board of Trade, where traders buy and sell in person, or they may be electronic, where traders buy and sell over the computer.

(3) The Dow Pit at the Chicago Board of Trade

8. The trading at issue in this case took place at the Chicago Board of Trade in the Dow Futures “pit.” The pit is octagon-shaped and about the size of a basketball court. Traders and brokers stand in the pit, about a foot or a foot and half apart, to trade Dow Futures. During the relevant time, from 100 to 150 people traded in the Dow Futures pit each trading day. 4/24/07 a.m. Tr. at 69.

9. Trading in the Dow Futures pit is done by “open outcry,” which means that bidding and offering are done orally. As a broker comes into the pit with an order to buy or sell Dow Futures, the brokers in the pit will call out prices. The trader who responds first with the best price gets the contract. The competition among traders is not only for the best price, but for the fastest best price. 4/24/07 a.m. Tr. at 89; 4/24/07 p.m. Tr. at 55-56.

10. Next to the Dow Futures pit, there is an electronic wall board. This wall board shows financial information that may be useful to traders in the Dow Futures pit and other neighboring pits. The financial information on the wall board included the current cash value of the underlying stocks in the S & P 500 Index (also called the “SPU Cash”) and the Dow Jones Industrial Average (also called the “Dow Cash”), as well as the ratio of the cash values of the two indexes (the ratio of the Dow Cash to the SPU Cash). The wall board also showed the prices of the individual stocks in the Dow. 4/24/07 a.m. Tr. at 69-70; 4/24/07 p.m. Tr. at 6.

11. Of the approximately 100 to 150 people who traded Dow Futures in the pit at the relevant time, approximately 15 to 30 were brokers who executed trades on behalf of customers, rather than for their own account. Of the remainder who traded on their own account, the largest number, approximately 50 to 100 traders were “scalpers,” who essentially sought to make money by profiting in the daily fluctuation in the price of the Dow Future by “buying low and selling high.” Another 40 traders, including those working for SIG, used various strategies to trade Dow Futures on their own accounts. 4/24/07 a.m. Tr. at 62-63; 4/24/07 p.m. Tr. at 53.

12. Some of the approximately 40 traders who used various strategies to trade on their own accounts were index arbitragers, who seek to make money from any mis-pricing between the value of the Dow Future and the value of the underlying stocks in the Dow. Others traded on technical analysis or charts, using market and financial history to predict trades. Others traded on order flow or momentum, seeking to profit by predicting when a large volume of orders will be made. A small number of 8 to 10 traders, discussed more fully below, traded using a Dow Fair Value strategy similar to, or identical to, that used by SIG. 4/24/07 a.m. Tr. at 62-63; 4/24/07 p.m. Tr. at 53.

(4) Hedging Trades

13. A hedging trade is a transaction taken to minimize risk. Hedging reduces risk by pairing transactions in two different securities whose prices tend to rise or fall together. For example, assuming the prices of Product A and Product B tend to move in the same direction, if one has bought Product A, hoping it will rise in price, one can hedge that position by selling Product B, so that if, contrary to expectation, the price of Product A falls, then (because Product A and B move in the same direction) the price of Product B should also fall and one can profit from the hedging sale one made in Product B. Thus, when a trade is hedged, a trader has captured whatever “edge” or expected profit he had in his original transaction and has insulated himself from the possibility of losing money if the market as a whole moves unexpectedly. 4/24/07 p.m. Tr. at 21-24; 4/25/07 a.m. Tr. at 68-69.

14. Trades in Dow Futures can be hedged with a variety of other products that tend to trade in the same direction. These include other S & P Futures, other Dow options, and baskets of the underlying stocks in the Dow Index. 4/24/07 a.m. Tr. at 92.

(5) Valuing Futures — Banking Fair Value

15. The value of an index future, like the Dow Futures and S & P Futures, is measured by a concept called “banking fair value.” Banking fair value represents the expected value of an index future as a function of the underlying cash value of the index on which it is based. 4/23/07 Tr. at 79.

16. Because an index future represents a contract to purchase the stocks that make up the index, the calculation of its banking fair value begins with the cash value of the stocks in the underlying index. For the Dow Future, this is the value of the stocks in the Dow Jones Industrial Average; for the S & P Future, it is the value in the stocks in the S & P 500 Index. 4/24/07 p.m. Tr. at 58-59.

17. The cash value of the index is then adjusted by two factors, one reflecting the value of the transaction costs saved by buying an index future rather than the underlying stocks, the other reflecting the value of the dividends that would have been received if one had bought the stocks rather than the index. 4/24/07 p.m. Tr. at 60.

18. Because buying an index future requires a smaller outlay of money than buying all the underlying individual stocks that make up an index, an investor saves money by buying a future. This means that an investor would be willing to spend more for an index future than for the stocks underlying that future, and that an index future is therefore worth more than the underlying stocks in the index. This extra value to a future is measured by the interest an investor would receive on the cash saved by buying an index future over buying the underlying stocks. The banking fair value of an index therefore adjusts the index’s cash value by adding the value of this interest. 4/24/07 p.m. Tr. at 59-60.

19. Owning an index future also differs from owning the underlying stocks in an index because the owner of an index is not entitled to dividends. This is a cost to buying a future as compared to buying the underlying stocks. The banking fair value of an index therefore adjusts the underlying cash value of the index by subtracting the value of the dividends that will not be received over the duration of the future. 4/24/07 p.m. Tr. at 60

20. Together the adjustment to an index future’s underlying cash value for interest and dividends is known by the term “Exchange for Physical.” The name refers to the exchange of an index future for the “physical” underlying stocks in the index. The Exchange for Physical is therefore a number, either positive or negative, representing the interest saved minus the dividends foregone from owning an index future. 4/24/07 p.m. Tr. at 63.

21. The definition of the banking fair value for the Dow Futures and for the S & P Futures can be written algebraically as:

Figure 1

Dow BFV [Banking Fair Value] = Dow Cash + Dow EFP [Exchange for Physical]

SPU BFV [Banking Fair Value] = SPU Cash + SPU EFP [Exchange for Physical]

4/24/07 p.m. Tr. at 63-64.

22. The concept of banking fair value and the formula describing it and the concept of “Exchange for Physical” are widely-understood and are not claimed to be trade secrets. 4/24/07 p.m. Tr. at 85, 100; SIG’s Proposed Findings of Fact and Conclusions of Law (hereinafter “SIG’s Proposed Findings”) at ¶ 12.

23. Because markets are not perfectly efficient, the price of a future may deviate from its banking fair value. This deviation is referred to as a future being “over.” The difference between the price of the Dow Future and its banking fair value is referred to as “Dow Over.” The difference between the price of the S & P Future and its banking fair value is referred to as “SPU Over.” 4/23/07 Tr. at 79; 4/24/07 p.m. Tr. at 58-59.

24.The definition of the SPU Over can be represented algebraically as

Figure 2

SPU Over = SPU Future - SPU BFV [Banking Fair Value]

In this formula, “SPU Future” refers to the price at which S & P Futures are trading. This formula can be rewritten by substituting the value for S & P BFV given in Figure 1:

Figure 3

SPU Over = SPU Future - (SPU Cash + SPU EFP)

4/24/07 p.m. Tr. at 66-67.

25.SIG does not claim the concept of “Dow Over” or “SPU Over,” or the formulas describing them, to be trade secrets. 4/25/07 a.m. Tr. at 14-16.

B. SIG’s Dow Fair Value Formula

26.SIG claims it has a trade secret in a concept for pricing Dow Futures and in a formula that expresses this concept in algebraic terms. The concept and formula have been referred to in this case as “Dow Fair Value.” 4/23/07 Tr. at 12-13.

27.The Dow Fair Value concept is based on the relationship between the Dow Futures and the S & P Futures. Because all of the stocks in the Dow Jones Industrial Average are in the S & P 500 Index, the price of the Dow Futures and the price of the S & P Futures tend to move in the same direction. During the time period at issue here, the market in S & P Futures was much more liquid than the Dow Futures, meaning that the S & P Futures traded more frequently than the Dow Futures. Because of this difference in liquidity, any movement in the price of these two futures would tend to appear first in the S & P Futures, with a delay of a few seconds or more before a corresponding change in the price of the Dow Futures. This momentary mispricing created an opportunity for a trader to profit. 4/24/07 p.m. Tr. at 47-49, 62.

28. The Dow Fair Value concept is that the percentage by which the Dow Futures are trading over or under their banking fair value should be the same as the percentage by which the S & P Futures are trading over or under their banking fair value. In other words, if the S & P Futures are trading 1% higher than then-banking fair value, then one would expect the Dow Futures also to be trading at 1% higher than their banking fair value. 4/28/07 Tr. at 79; 4/25/07 a.m. Tr. at 6-7.

29. This concept can be represented by the following formula:

Figure 4

Dow Over = SPU Over

Dow Cash SPU Cash

As in the other formulas above, Dow Cash and SPU Cash refer to the cash value of the underlying stocks in, respectively, the Dow Jones Industrial Average and S & P 500 Index. The Dow Over and the SPU Over are the amount by which the Dow Futures and the S & P Futures, respectively, are trading over their Banking Fair Value. 4/24/07 p.m. Tr. at 58.

30.Because of the greater liquidity in the S & P Futures, a change in the value of the SPU Over should occur before the corresponding change in the Dow Over. For this reason the Dow Fair Value formula derives a value for Dow Over based on the value of SPU Over. 4/24/07 p.m. Tr. at 50-52.

31.The formula representing the central concept of the Dow Fair Value formula, set out in Figure 4, can be algebraically rewritten to isolate the value for Dow Over by multiplying both sides of the equation by Dow Cash:

Figure 5

_SPU Over

Dow Over = Dow Cash * SPU Cash

4/24/07 p.m. Tr. at 65-66.

32.The formula for Dow Over in Figure 5 can also be algebraically re-written as:

Figure 6

Dow Cash

Dow Over = SPU Over * SPU Cash

This expresses the concept that the Dow Over equals the SPU Over, multiplied by the ratio between the cash values of the S & P 500 Index and the Dow Jones Industrial Index. 4/25/07 a.m. Tr. at 16.

33.Having used the central concept of the Dow Fair Value formula, set out in Figure 4 at ¶ 29, to isolate a value for Dow Over that is a function of the SPU Over, one can then use that value to write a formula for the fair value of the Dow Futures. 4/24/07 p.m. Tr. at 69-70.

34.The fair value at which the Dow Futures should be trading is the Dow Futures’ banking fair value plus a value for the Dow Over. This can be written as:

Figure 7

Dow Fair Value = Dow Over + Dow BFV [Banking Fair Value]

Substituting the value for the Dow banking fair value given in Figure 1, at ¶ 21 above, yields the formula:

Figure 8

Dow Fair Value = Dow Over + (Dow Cash + Dow EFP)

Substituting the value for Dow Over set out in Figure 5 at ¶ 31, and derived from the underlying concept set out in Figure 4, yields the formula:

Figure 9

SPU Over

Dow Fair Value = (Dow Cash * SPU Cash) + (Dow Cash + Dow EFP)

4/24/07 p.m. Tr. at 69-70.

35.The formula in Figure 9 is what SIG has described as the “ultimate” version of its Dow Fair Value formula. 4/24/07 p.m. Tr. at 69. SIG contends that this formula is a proprietary trade secret. It also contends that the formula in Figure 4, from which the “ultimate” formula derives, is also a proprietary trade secret. 4/24/07 p.m. Tr. at 93; 4/25/07 Tr. Vol. I at 7, 59-60.

36.There are four components to the Dow Fair Value formula, as that formula is written in Figure 9: Dow Cash, SPU Cash, Dow EFP and SPU Over. As described in Figure 3, the SPU Over is itself derived from the S & P Future minus the SPU Cash and the SPU EFP. All parties therefore generally describe the Dow Fair Value formula as having five inputs: Dow Cash, SPU Cash, Dow EFP and SPU EFP and the price of the S & P Futures. 4/23/07 Tr. at 150-52; 4/24/07 a.m. Tr. at 103.

37. The Dow Fair Value Formula allows a trader to calculate a numeric value for the expected fair value of the Dow Futures. A trader can then compare the resulting number for the Dow Fair Value with the actual amount for which the Dow Future is trading to determine whether to trade. If the market is trading above the Dow Fair Value calculation, this is a signal to sell; if the market is trading below the Dow Fair Value calculation, this is a signal to buy. 4/24/07 p.m. Tr. at 69-70.

38. The Dow Fair Value formula identifies a mispricing between the value of the Dow Futures and the S & P Futures. This mispricing is momentary, lasting from a fraction of a second to a few minutes. 4/24/07 p.m. Tr. at 43-44. 4/25/07 a.m. Tr. at 47.

39. As discussed more fully below, after SIG began using the Dow Fair Value formula to trade, the formula was put into a computer spreadsheet, which increased the speed with which its traders could calculate the value for the Dow Fair Value. SIG contends its use of the spreadsheet to calculate the Dow Fair Value formula is itself a trade secret. 4/24/07 p.m. at 93-94, 103-04.

C. SIG’s Discovery of the Dow Fair Value Formula

(1) SIG’s Trading of Dow Futures Before It Began Using the Dow Fair Value Formula

40. The Dow Futures pit at the Chicago Board of Trade opened in 1997. 4/26/07 Tr. at 26, 27.

41. In October 1997, SIG assigned a trader, Jim Lofredo, to trade Dow Futures in the pit. Lofredo did not use the Dow Fair Value concept or formula in his trading. His trading was not particularly profitable and SIG had him stop trading Dow Futures after a few months. 4/26/07 Tr. at 67-68; 7/10/03 P.I. Tr. at 129.

42. In August of 1999, SIG assigned Francis Wisniewski to begin trading in the Dow pit to see if he could make any money trading Dow Futures. For the first month or so that he traded, Wisniewski used a strategy called “arbitrage fair value” that had been taught to him by SIG. 4/26/07 Tr. at 60-61.

43. The arbitrage fair value strategy looks to a future’s banking fair value to set the future’s “fair value.” When a future is trading below its banking fair value, an arbitrage fair value strategy would consider the future undervalued and would signal to buy; when a future is trading above its banking fair value, the arbitrage fair value strategy would consider the future overvalued and would signal to sell. 4/26/07 Tr. at 61, 68-69.

44. Wisniewski’s August 1999 trading in the Dow pit using the arbitrage fair value strategy was not profitable, and he only broke even on his trades. 4/26/07 Tr. at 61.

(2) Wisniewski’s Development of the Dow Fair Value Concept and Formula

45. Around September 1999, after he had been trading unsuccessfully in the Dow pit for a month using an arbitrage fair value strategy, Wisniewski began observing what other, successful traders in the pit were doing. He observed other traders looking up at the electronic wall board near the Dow Futures pit and watching the values for the S & P Index. He noticed that when the values for the S & P Futures were going up, these traders were buying, and when the values went down, they sold. He also noticed that when the value of the S & P Future went up a dollar, the value of the Dow Future would go up nine dollars, an amount proportional to the different underlying cash values of the two indexes. He also observed that these traders appeared to be making money. 4/24/07 a.m. Tr. at 79; 4/26/07 Tr. at 61-62, 69-70.

46. Based on what he observed these other traders doing, Wisniewski wrote out the formula for Dow Fair Value, set out in Figure 9. He based this formula on what he deduced the traders whom he had been observing were using as the basis for their trades. Wisniewski did not believe his formula was anything novel or unique, and drafting it did not take him much time. He viewed it as a simple algebraic expression of the concept that he observed other traders using. This concept was that, when the S & P Futures were trading over (or under) their banking fair value the Dow Futures should trade over (or under) their banking fair value in the same proportional amount. Wisniewski does not believe that he created this concept. 4/26/07 Tr. at 61-62, 69-73, 75.

47. After Wisniewski derived the Dow Fair Value formula, he used it to trade Dow Futures in the Dow pit for the next two months, September and October of 1999. By the end of that period, Wisniew-ski had made approximately $30,000 in profits. During this time, Wisniewski did not tell anyone at SIG about the Dow Fair Value formula because he did not think it was “anything special.” 4/26/07 Tr. at 62-63, 73.

48. At this time, Wisniewski put the formula on a computer spreadsheet that was kept in the SIG trading booth, approximately twenty or thirty feet behind the Dow pit. Because Wisniewski did not have a handheld computer with him in the pit at this time, he did the calculations for the Dow Fair Value formula in his head when he traded in the pit in September and October of 1999. 4/24/07 p.m. Tr. at 25; 4/26/07 Tr. at 63-64.

49. After Wisniewski had been trading for two months using the Dow Fair Value formula, SIG decided to reassign him to a different trading floor, trading internet equity options. Wisniewski saved his spreadsheet containing the Dow Fair Value formula on his computer and did not use it for almost two years. 4/26/07 Tr. at 63, 73-74.

D. SIG’s Trading Using the Dow Fair Value Formula

(1) Fishkin’s Trading at SIG

50. After the internet boom ended in the spring of 2001, SIG reassigned Wis-niewski from trading internet equity options and assigned him again to trade Dow Futures in the Dow pit. 4/26/07 Tr. at 63.

51. In August 2001, Wisniewski began trading in the Dow pit using the Dow Fair Value formula. He was assisted by Cal Fishkin, who joined him in the Dow pit in September 2001. 4/23/07 Tr. at 70; 4/26/07 Tr. at 63.

52. Cal Fishkin had joined SIG in late spring 1999, after his graduation from college. Other than participating in SIG’s college internship program in the summer of 1998 and some trading on his own, Fishkin had not had any professional experience as a securities trader before beginning work at SIG, although he had traded on his own account. From June 1999 through August 2001, Fishkin worked for SIG in Chicago, trading equity options. 4/23/07 Tr. at 70.

53. In September 2001, Fishkin was assigned to assist Wisniewski trading Dow Futures in the Dow pit. Fishkin had not had any experience trading Dow Index Futures or any other index future before September 2001. 4/23/07 Tr. at 70-72.

54. When Fishkin began working with Wisniewski in the Dow pit, he learned that Wisniewski was trading using the Dow Fair Value concept and formula. Fishkin learned the concept and formula and used it to trade Dow Futures. 4/23/07 at 73.

55. Wisniewski and Fishkin’s supervisor at SIG from 2001 through 2003 was John Capobianco, the manager of the Dow Trading group. Capobianco became the manager of the Dow Trading group around September 2003, after Wisniewski had returned to trading Dow Futures and around the same time that Fishkin began trading in the Dow pit. 4/23/07 Tr. at 175-76; 4/24/07 p.m. Tr. at 98.

56. Capobianco did not work in Chicago. He communicated with Fishkin and Wisniewski through a headset that allowed him to hear what the traders were doing in the pit and to communicate with them. Capobianco also had weekly conference calls with his traders. He also received information at the end of each trading day as to the traders’ net position at the end of trading and their profit and loss for the day. 4/24/07 a.m. Tr. at 21; 4/24/07 p.m. Tr. at 15.

57. Wisniewski and Fishkin’s trading using the Dow Fair Value formula proved very successful. In 2002, the SIG Dow Trading Group, for which Wisniewski and Fishkin were the primary traders, made net trading profits of $30,000,000, a gain of $35,000,000 in Dow Futures, and a loss of approximately $5,000,000 on products used to hedge the Dow Futures trades. 4/24/07 a.m. Tr. at 99.

58. Igor Chernomzav was another trader employed by SIG. Chernomzav, however, did not trade Dow Futures at SIG. 7/9/03 P.I. Tr. at 132. No findings of fact were submitted to the Court by any party, as to what role, if any, Mr. Cher-nomzav played in SIG’s Dow Trading Group before he and Fishkin left SIG to start TABFG in the spring of 2003, nor did any witness at trial testify about his role. The only mention of Chernomzav’s work at SIG is a brief reference in the testimony of SIG Managing Director Mark L. Dooley at the earlier preliminary injunction hearing in this matter, designated by SIG as an exhibit in this trial.

(2) Hedging at SIG

59. Fishkin and Wisniewski engaged in hedging transactions to reduce the risk of their Dow Futures trades. Fishkin and Wisniewski primarily used the S & P Futures to hedge their Dow Futures trades, but they also hedged with other products. Some of the other products Fishkin and Wisniewski used to hedge their Dow Futures trades were NASDAQ Futures, Dow options, trades in the underlying stocks in the Dow Industrial Average, and trades in “Diamonds,” which are exchange-traded funds that track the Dow Jones Industrial Average. Trades in Dow Futures could also be hedged with other Dow Future trades. 4/23/07 Tr. at 118, 127; 4/24/07 a.m. Tr. at 92; 4/25/07 a.m. Tr. at 42.

60. SIG had no policy as to when a trade needed to be hedged or what hedging product should be used. These decisions were left up to the individual trader. A trader could decide to hedge part of the risk of a trade immediately and then wait to hedge the rest later. 4/24/07 a.m. Tr. at 92; 4/25/07 a.m. Tr. at 42, 65.

61. SIG could impose risk limits on Wisniewski and Fishkin when it believed they had taken on too much risk. If their manager, Capobianco, believed a position they had taken involved too much risk, he could ask them to reduce that risk by hedging. 4/25/07 a.m. Tr. at 66-67.

62. The largest unhedged position Fishkin ever had at SIG at the end of the day in dollar volume terms was $15 million. 4/24/07 a.m. Tr. at 20.

63. Logistically, hedging at SIG was done with one trader in the Dow pit trading Dow Futures and another trader trading S & P futures electronically in the nearby trading booth. The trader in the Dow Future pit and the trader in the booth, as well as Capobianco, were linked through headsets in a communication network. 4/24/07 p.m. Tr. at 25.

64. Hedging transactions were included in SIG’s calculation of the profitability of the Dow Futures trading group. 4/24/07 p.m. Tr. at 26.

(3) Use of the Spreadsheet at SIG

65. When Wisniewski and Fishkin began trading in the Dow pit in August and September 2001, they did not have han-dheld computers. The spreadsheet that contained the Dow Fair Value formula was on a computer in the SIG booth, some twenty or thirty feet from the pit, and so was unavailable to them when they traded. Without access to the spreadsheet, Wis-niewski and Fishkin would calculate the Dow Fair Value formula in their heads, using figures available on the electronic wall board. 4/23/07 Tr. at 166-68, 181-82; 4/26/07 Tr. at 63-64.

66. In the aftermath of September 11, 2001, the stock market experienced great volatility, which made it difficult for Fish-kin and Wisniewski to calculate the changing values for the Dow Fair Value formula in their heads. At that time there were five to ten traders in the Dow pit who were using handheld computers, and Fishkin and Wisniewski asked SIG to provide them with similar equipment. SIG provided Fishkin and Wisniewski with handheld computers by the end of October 2001. 4/23/07 Tr. at 167, 182; 4/26/07 Tr. at 64-65.

67. After receiving the handheld computers, Wisniewski and Fishkin used the spreadsheet to calculate the Dow Fair Value formula while they traded in the pit. 4/23/07 Tr. at 146, 153; 4/26/07 Tr. at 64-65.

68. Using the computer spreadsheet to calculate the Dow Fair Value formula while trading in the pit was a more effective way of trading than doing the calculation in one’s head. Using the spreadsheet allowed the calculations to be made faster, allowing Fishkin and Wisniewski to make decisions faster and make more trades. 4/24/07 p.m. Tr. at 103-04; 7/10/03 P.I. Tr. at 172-173,191-92.

69. The spreadsheet that Wisniewski and Fishkin used to calculate the Dow Fair Value formula was a publicly available Microsoft Excel spreadsheet. 4/24/07 p.m. Tr. at 85; 4/25/07 a.m. Tr. at 23.

70. The spreadsheet had “live feeds” of data that provided constantly-updated inputs of the values needed to calculate the formula. The values of these inputs were constantly changing, which meant the numeric result of the formula was also constantly changing. 4/24/07 p.m. Tr. at 86.

71. The inputs into the spreadsheet included all the values necessary for calculating the Dow Fair Value Formula: the underlying cash value of the Dow Jones Industrial Average (“Dow Cash”); the underlying cash value of the S & P 500 Index (“SPU Cash”); the current price of the S & P Futures; and the exchange for physical for both the Dow Futures (“Dow EFP”) and the S & P Futures (“SPU EFP”). 4/24/07 p.m. Tr. at 87-88.

72. “Live feeds” for all the values necessary to calculate the Dow Fair Value formula were publically available. SIG, however, used proprietary figures for the “exchange for physical” values in the formula because it used it used its own cost of capital for the interest rate portion of those values. 4/25/07 a.m. Tr. at 21-23.

73. The spreadsheet’s display showed all of the components of the Dow Fair Value formula — Dow Cash, SPU Cash, SPU Over, Dow BFV and SPU BFV — as well as the numeric result of the formula. The numeric result of the Dow Fair Value formula was unlabeled on the spreadsheet, and the spreadsheet did not show the Dow Fair Value formula, itself. 4/24/07 p.m. Tr. at 87-89; Exhibit D-7.

74. The spreadsheet’s display changed over time. In order to disguise the numeric result of the Dow Fair Value calculation, SIG at one time had a large “dummy” number on its spreadsheet. This was done in the hopes of confusing other traders who might see SIG’s spreadsheet while Fishkin or Wisniewski were trading in the pit into thinking the “dummy” number was the fair value number that SIG was using in its trading. 4/24/07 Tr. a.m. at 122; 4/24/07 p.m. Tr. at 89-90.

75. The spreadsheet calculated an expected fair value for the Dow Futures using the Dow Fair Value formula. The individual trader would compare the expected fair value on the spreadsheet with the current price of the Dow Future in the pit and decide whether to make a trade. The decision whether to make a trade and at what price was in the discretion of the trader. The spreadsheet did not contain any information relevant to hedging. 4/24/07 a.m. Tr. at 88-91; 4/25/07 a.m. Tr. at 31, 35.

E. Others’ Knowledge of the Dow Fair Value Formula

(1) SIG’s Efforts to Keep the Dow Fair Value Concept and Formula Confidential

76. SIG never publicly revealed or published its Dow Fair Value formula or the concept behind it. 4/24/07 p.m. Tr. at 93.

77. SIG included confidentiality provisions in its employment contracts with its traders, including Wisniewski, Fishkin, and Chernomzav, prohibiting the disclosure of confidential information, including “trading and/or order execution techniques, methods and/or strategies; computer programs, software and data; [and] computational algorithms.... ” Confidential information as defined in the contracts did not include “information which is public knowledge ... or which is generally known in the industry.” Exhibits D-l at ¶ 13; D-10 at ¶ 13; D-15 at ¶ 13.

78. SIG took steps to minimize the possibility that other traders could learn about the Dow Fair Value concept or formula from the spreadsheet by not labeling the result of the formula and by including a “dummy” number. 4/24/07 Tr. a.m. at 122; 4/24/07 p.m. Tr. at 89-90.

79. At one point during the time Fish-kin was trading at SIG, SIG agreed to become a “market maker” in the Dow mini. A market maker is obligated at all times to put out a price at which it would be willing to buy and a price at which it would be willing to sell a particular security. In return, the market maker has the opportunity to make a profit on the trades it makes. When SIG became a market maker in the Dow mini, it used the Dow Fair Value Formula to electronically set the price at which it would buy and sell the Dow mini. This had the effect of revealing SIG’s Dow Fair Value calculation, because the prices at which SIG offered to buy and sell the Dow mini bracketed its calculation of fair value. After Wisniewski complained that SIG’s market making was revealing this calculation, SIG changed the way it made markets in the Dow mini to widen the spread between these prices in order to disguise its fair value calculation. 4/24/07 p.m. Tr. at 90-92.

80. During the time period relevant to this lawsuit, 2001 through 2003, SIG’s use of the Dow Fair Value concept, the Dow Fair Value formula, and the spreadsheet in trading Dow Futures provided SIG with a competitive advantage over other traders who did not trade using that concept, formula, and spreadsheet. During this time period, Wisniewski and Fishkin profited by making trades with other traders who were not using the Dow Fair Value concept and formula. The spreadsheet provided an additional competitive advantage by allowing Wisniewski and Fishkin to calculate a value for the Dow Fair Value more quickly. Because, under the rules of the Dow pit, the trader who responds first to a bid or offer with the best price gets the contract, the additional speed provided by the spreadsheet enabled Wisniewski and Fishkin to get more trades. 4/23/07 Tr. at 166-68, 180-81; 4/24/07 p.m. Tr. at 103-04.

(2) Other Traders’ Knowledge of the Dow Fair Value Concept and Formula

81. Although under prevailing “trading etiquette” in the Dow Futures pit traders and brokers did not usually talk explicitly about their strategies, the open nature of the pit, which enabled traders to see what trades were made and what information seemed to spur those trades, allowed traders to get a sense of each others’ strategies. Those traders who were trading based on a Dow Fair Value calculation tended to know each other and talk about trades they did. 4/23/07 Tr. at 173; 4/24/07 a.m. Tr. at 71-72; 4/26/07 Tr. at 28-30, 42-43, 48-49, 61-62, 71.

82. Of the 100 to 150 people who traded in the Dow Futures pit each trading day in 2001 to 2003, at least 8-10 traded using the same Dow Fair Value concept that SIG used. The traders using the Dow Fair Value concept included Mark Hatfield, who traded in partnership with David Rasmussen; Michael Mulroney, Doug Rock, and Renee Ritter-Purdy, who traded in a group; Rick Soul, Michael Floodstrand, Jim Kunsik, and traders from the firm of Timberhill & Timberhill. All of these traders priced the Dow Futures off the S & P Futures, using the concept embodied in Figure 4 at ¶ 29, above, ie., that the percentage by which the Dow Futures were trading over or under their banking fair value should be the same as the percentage by which the S & P Futures were trading over or under their banking fair value. 4/24/07 a.m. Tr. at 62-64; 4/26/07 Tr. at 11, 15, 42, 48^9; Exhibit FP-16 at 15-16,19.

83. At least six of these traders were using the Dow Fair Value concept to trade before September 1999, when Wisniewski first discovered it. These traders included James Kunsik, Rick Soul, Michael Floodst-rand, Michael Mulroney and Doug Rock, as well as traders from Timberhill and Timberhill. 4/26/07 Tr. at 33, 42, 47.

84. By 2001, several of the traders who used the Dow Fair Value concept to trade used a spreadsheet and a handheld computer when they traded in the pit. These traders included Rene Ritter-Purdy, Michael Mulroney, Michael Floodstrand, Mark Hatfield and Dave Rasmussen, and Timberhill & Timberhill. 4/26/07 Tr. at 16, 33, 42, 44, 50-51; Exhibit FP-16 at 18, 65.

85. At least two groups of traders who traded using the Dow Fair Value concept also used the same Dow Fair Value formula as did SIG. These traders were Mark Hatfield and his partner David Rasmussen and the group of Michael Mulroney, Doug Rock, and Renee Ritter-Purdy. 4/26/07 Tr. at 31, 49-51. Another trader, Martin Lorenzen, who had worked as a clerk in the pit from November 2000 until he began trading in late 2001, also used the Dow Fair Value formula to trade Dow Futures. Mr. Lorenzen, however, only traded Dow Futures electronically and did not trade in the Dow Futures pit. 4/26/07 Tr. at 14, 22.

(3) Public Knowledge of the Dow Fair Value Concept and Formula: The Article “Fair Value for Dummies”

86. An article entitled “Fair Values for Dummies,” dated April 17, 2000, and with a byline by “Staff Writer Jake Ullick, New York (CNNfn),” was published on the internet sometime before November 7, 2001.

87. The “Fair Value for Dummies” article begins by noting that the term “fair value” is a “phrase fast gaining currency in the world of business journalism” and that “investors itching to know how the stock market might open” are using “fair value quotes” to do so. The article explains that understanding the concept of “fair value” begins with understanding the relationship between the S & P 500 futures contract and the S & P 500 Index. The article says that “determining the fair value relationship between the S & P 500 futures contract and the underlying S & P index requires adding [to the value of the index] the cost of borrowing the money to buy the S & P stocks while subtracting the gain those stocks pay in dividends.” The article says that, although trading desks calculate this “fair value” number after the market closes, futures trading continues in the overnight market. This means that “if before the stock market opens, futures are trading above their fair value relationship to where the S & P closed the previous day, stocks are likely to open higher.” Exhibit FP-35.

88. The article then goes on to give a “real-life example” of this concept. The article says that, on April 12, 2000, the S & P 500 Index closed at 1,467.17, but S & P Futures closed higher at 1,476.70, and the fair value for the S & P Futures was calculated to be still higher at 1,480.31. On the morning of April 13th, the S & P Futures ended their overnight trading at 1,483.20, which was 2.89 above their fan-value of 1,480.31. This, the article says, led forecasters to predict that the stock market would open higher, and “sure enough at 10:10 a.m., the S & P 500 index was up 3.49 to 1,470.66.” Exhibit FP-35.

89. The article then notes that “[t]ypi-cally, one point above or below fair value equals 8 points on the Dow Jones Industrial Average as trading begins” and that “[t]his l-to-8 relationship reflects the ratio between the value of the S & P 500 ratio and the Dow.” The article then says that “[a]t 10:10 a.m. ET, the Dow was up 15.20, near the 23.12-point gain that the fan-value formula anticipated.” Exhibit FP-35.

90. The article concludes by noting that the fair value concept can also be used in day trading in the S & P Futures. Although ordinarily the price of the S & P Futures moves in “a fair trade relationship” to the S & P 500 Index, occasionally the S & P Futures may trade above or below its fair value relationship with the underlying index. At these times, arbitragers will trade looking “to make money when the S & P 500 futures contract returns to its historic relationship to the S & P 500.” Exhibit FP-35.

91. The article “Fair Value for Dummies” does not concern the Dow Fair Value concept or formula at issue in this lawsuit.

92. The term “fair value” as used in the article refers to what the witnesses at trial and the Court in this opinion have called “banking fair value.” As discussed above at Figure 1, ¶ 21, the banking fan-value of an index future is the cash value of the underlying index, adjusted for interest saved and dividends forgone by owning the future instead of the underlying stocks. This is the same definition that the article uses for the “fair value” of the S & P Futures: the value of the underlying S & P 500 index adjusted by “adding the cost of borrowing the money to buy the S & P stocks while subtracting the gain those stocks pay in dividends.” Exhibit FP-35.

93. The article does describe the concept of “SPU Over” although it does not use that term. The concept of SPU Over, set out above in Figures 2 and 3 at ¶ 24, is the amount by which the S & P Futures are trading above or below their banking fair value. The article discusses the same concept, “the amount by which the S & P Futures are trading above their fair value relationship.”

94. The Dow Fair Value concept at issue in this suit uses the SPU Over — the amount by which the S & P Futures are trading above or below their banking fair value — to derive a fair value for the Dow Futures. In contrast, the “Fair Value for Dummies” article discusses using the SPU Over to predict whether the stock market will open higher than its previous day’s close. The article says nothing about using the SPU Over or the S & P’s banking fair value to trade Dow Futures.

95.The only portion of the article that discusses futures trading describes how arbitragers buy or sell S & P Futures whenever the price of those futures “trades above or below its [banking] fair value relationship with the S & P 500 index.” This describes the arbitrage fair value strategy that SIG and Wisniewski used prior to their discovery of the Dow Fair Value concept and formula. It does not describe the Dow Fair Value concept. See ¶¶ 42-43, above; 4/26/07 Tr. at 61, 68-69.

96. One part of the “real-life example” given by the article appears superficially similar to the Dow Fair Value concept. The article states that on the evening of April 12, 2000, the [banking] fair value of the S & P Futures was 1,480.31, but after overnight trading, the S & P Futures were trading at 1,483.20, or 2.89 over their banking fair value. The article states that there is an l-to-8 ratio between the value of the S & P 500 ratio and the Dow, and “[a]t 10:10 a.m. ET, the Dow was up 15.20, near the 23.12-point gain that the fair value formula anticipated.” The predicted 23.12 point gain is eight times the 2.89 points that the S & P Futures were trading over their banking fair value.

97. This calculation is superficially similar to the formula for the Dow Fair Value concept given in Figure 6 at ¶ 32:

Figure 6

Dow Cash

Dow Over = SPU Over * SPU Cash

The article takes the 2.89 points that the S & P Futures are trading over their banking fair value (“SPU Over”) and multiplies it by the 8-to-l ratio of the value of the Dow Industrial Index (“Dow Cash”) to the value of the S & P 500 index (“SPU Cash”) to get a predicted 23.12 point gain in the Dow. The article is therefore performing the same calculation as the right-side of the equation in Figure 6. The calculation in the article and the formula in Figure 6 differ, however, in the left side of the equation: the description of the result. The Dow Fair Value concept in Figure 6 describes the result of this calculation as Dow Over, the amount by which the value of the Dow Futures differs from its banking fair value. The article, in contrast, says that the result of this calculation is a predicted gain in the underlying Dow Industrial Index. The two calculations are therefore not the same.

F. Fishkin’s Departure from SIG and the Formation of TABFG and the Joint Trading Venture with NT Prop

(1) Fishkin’s Dissatisfaction with SIG

98.In June 2002, approximately ten months after he had begun trading Dow Futures with Wisniewski, Fishkin sought to open discussions with SIG about a new employment contract. Fishkin’s then-current three-year contract with SIG was entered into in March 2000 and expired in March 2003. 4/23/07 Tr. at 88; 4/24/07 Tr. a.m. at 99; Exhibit D-l.

99. Fishkin’s reason for seeking to discuss a new contract nine months before his current contract expired was his dissatisfaction with his compensation. At this time, Fishkin and Wisniewski’s trading in Dow Futures was generating large profits for SIG. Through July 2002, Fishkin and Wisniewski had made SIG profits of approximately $10,000,000. The net profits of Fishkin and Wisniewski’s Dow Trading Group in 2002 were between $20,000,000 and $30,000,000. Fishkin’s base salary in 2001 and 2002 was $80,000 a year, and he received an $80,000 bonus in 2002 for work he did in 2001 and a $365,000 bonus in 2003 for the work he did in 2002. Fish-kin’s base salary was increased to $100,000 in 2003. 4/23/07 Tr. at 80-85; 4/24/07 a.m. Tr. at 99; 7/8/03 P.I. Tr. at 107-08.

100. Fishkin did not receive a response from SIG for several months to his request to open negotiations on a new contract. Shortly after making his request, however, he was asked by SIG to train another trader, Sean Haggerty, in trading Dow Futures. One of SIG’s reasons for having Haggerty join Wisniewski and Fishkin was to protect SIG’s investment and allow SIG to continue to trade Dow Futures in the event Wisniewski left the firm. 4/24/07 Tr. a.m. at 99-100; 7/8/03 P.I. Tr. at 116.

101. In November 2002, Fishkin told Chernomzav that he was not happy at SIG and that he was going to leave the firm. 4/24/07 a.m. Tr. at 51.

(2) Fishkin’s Initial Discussions about a Joint Venture to Trade Dow Futures

102. In December 2002, Fishkin was approached on the floor of the Chicago Board of Trade by John Zawalski, a broker and trader for another company, who asked Fishkin if he was happy with his employment at SIG. Fishkin told him he was not happy. 4/23/07 Tr. at 88-89; 4/24/07 a.m. Tr. at 49-50.

103. Zawalski told Fishkin that he was attempting to organize a group to trade Dow Futures and asked whether he would be interested in helping form that group. Fishkin said he would be interested after his then-current contract with SIG expired in March 2003. 4/23/07 Tr. at 90-91; 4/24/07 a.m. Tr. at 50; Trial Ex. D-31 at No. 3.

104. After this initial approach, there was a dinner meeting between Fishkin and Wisniewski and two representatives of what Fishkin referred to as “NT,” Larry Nocek and Robert J. O’Byrne, about forming a group to trade Dow Futures. At the dinner, Fishkin said he would be interested in joining such a group after the expiration of his contract with SIG in March 2003. 4/23/07 Tr. at 93-94.

105. Fishkin had not met Nocek before the dinner meeting. Fishkin knew Nocek and O’Byrne worked for “NT something,” but he did not know exactly which NT entity it was. He believed Nocek was the head of this company and that O’Byrne worked for him. Only in April 2003, did Fishkin become aware that NT Prop was the entity with which he was going to enter into an agreement. 4/24/07 a.m. Tr. at 51-53.

106. Wisniewski said he would be interested in joining Fishkin and the NT representatives in the new venture if SIG consented or if he could, through a court ruling or otherwise, become free of his contractual obligations to SIG. As discussed below, Wisniewski’s then-operative contract with SIG had different non-competition provisions than Fishkin’s. 4/23/07 Tr. at 94-95; 4/24/07 a.m. Tr. at 43; Exhibit D-31 p. 3.

107. A further meeting to discuss the new venture was held at the offices of “NT” in February or March of 2003. Attending were Wisniewski, Fishkin, Nocek, O’Byrne, and Zawalski. The same partiei-pants also held a second dinner meeting sometime shortly thereafter. 5/12/03 Dep. of Wisniewski at 20, 23, 24.

108. In the end, Wisniewski did not join the new venture and remained at SIG. 4/24/07 a.m. Tr. at 44.

(3) The Ownership of NT Prop

109. NT Prop was incorporated in Illinois on April 11, 2003. Ownership of NT Prop is split 50/50 between NT Financial Group and Pfeil Commodity Fund LLC. Larry Nocek is the biggest shareholder of NT Financial Group, owning 42% of the company. Richard Pfeil is the sole shareholder of Pfeil Commodity Fund LLC. Pfeil is also an investor in NT Financial Group. Exhibit D-400; 3/3/04 Dep. of Larry Nocek at 12-13, 27-28; 3/3/04 Dep. of Richard Pfeil at 4, 6;

110. The business of NT Prop was to assist and financially back traders. NT Prop does not itself provide funds from its own accounts, but arranges financing from others. NT Prop has no employees. 10/7/03 Dep. of Robert J. O’Byrne at 6, 7-8.

111. NT Prop had two managers. One was Larry Nocek. The other was William Anthony, Richard Pfeil’s attorney. 12/22/05 Dep. of Larry Nocek at 12; 3/3/04 Deposition of William Anthony at 4, 5.

112. Sometime in early April, Nocek suggested to Pfeil that they fund a venture with what Nocek described as a group of smart traders. Pfeil suggested Nocek discuss details with his lawyer, William Anthony. Pfeil ended up providing $2,000,000 in start up money to the joint venture through NT Prop. 3/3/04 Dep. of Richard Pfeil at 6-9.

(4) Fishkin’s Disclosure to Representatives of NT Prop About the Restrictive Covenants in his Employment Contract with SIG

113. Fishkin and Chernomzav’s contracts with SIG contained covenants not to compete, non-association provisions, and confidentiality provisions. The non-competition provisions in Fishkin and Cher-nomzav’s contracts barred them, without written consent from SIG, from trading (in any manner or capacity) in any products that they had traded during the three months before they left SIG’s employ, for a period of either nine months after termination or three years after beginning SIG’s initial training course, whichever was later. The non-association provisions of Fishkin and Chernomzav’s contracts barred them, for a period of five years after the termination of their employment, from i) inducing any SIG employee from leaving SIG’s employ or ii) from hiring, managing, or supervising, or becoming associated with in a partnership or corporation, any person who is or was a SIG employee in the nine months prior to being hired, managed, supervised, or associated with Fishkin or Chernomzav. Their contracts also contained provisions barring them from disclosing SIG’s confidential information to others, either during or after the termination of their employment, without SIG’s prior written consent. Exhibit D-l at ¶¶ 8, 13; Exhibit D-10 at ¶¶ 8, 13.

114.Francis Wisniewski’s contract with SIG, entered into September 27, 2002, also contained non-competition, non-association provisions, and confidentiality provisions. The non-competition provisions differ from those in Fishkin and Chernomzav’s contract. Wisniewski’s contract with SIG barred him from trading in, or being financially interested in the trading of, any financial products as long as he was employed by SIG or until December 31, 2003, whichever was later. It also barred him from trading in any products that he was trading in the three months prior to any termination from SIG for a period of nine months after his termination or September 30, 2004, whichever was later. The non-association and confidentiality provisions in Wisniewski’s contract are substantively identical to those in Fishkin and Chernomzav’s contracts. Exhibit D-15 at ¶ 7.

115. Fishkin and the NT representatives had several subsequent meetings between December 2002 and April 2003 to discuss setting up the new trading venture. 4/23/07 Tr. at 98-99.

116. In these meetings, Fishkin told the NT representatives that there were restrictive covenants in his contract with SIG, and that he believed these clauses were invalid and unenforceable. Fishkin testified that, among the NT Prop representatives whom he told, were Larry No-cek and William Anthony, who was one of the managers for NT Prop as well as an attorney for Richard Pfeil. 4/23/07 Tr. at 98-100.

117. Fishkin told the NT representatives that these restrictive covenants would have to be dealt with and this would require hiring attorneys and paying legal fees. Fishkin also told NT representatives about the restrictions in Wisniewski’s contract and that dealing with Wisniewski’s restrictions might require even more fees. 4/23/07 Tr. at 100-03.

118. Fishkin told NT representatives that, if they wanted him to work with them, they would have to bear some of the legal costs involved in lifting these restrictive covenants. 4/23/07 Tr. at 103.

119. In deposition testimony admitted into evidence, Larry Nocek contradicts Fishkin’s testimony that Fishkin told him about the restrictive covenants. Nocek denies being told by either Fishkin or Wisniewski that they had restrictive covenants in their employment contracts with SIG and says, to the contrary, that Fishkin said that he had no restrictions on his ability to trade in the joint venture. 3/3/04 Dep. of Larry Nocek at 34-35, 38, 39, 41, 74-75.

120. The Court had the opportunity to observe Fishkin testifying at trial and found him to be credible. The Court, not having had the opportunity to observe No-cek’s testimony, therefore resolves the contradiction between Fishkin and Nocek’s testimony in Fishkin’s favor, finding that he did inform Nocek of the restrictive covenants in his employment contract.

121. In deposition testimony admitted into evidence, Richard Pfeil testified that he had no knowledge concerning Wisniew-ski or Fishkin’s employment agreements and did not even know what company they had been working for before NT Prop entered into the joint venture with Fish-kin. Pfeil testified he left details of the deal to his lawyer, William Anthony. Anthony testified at deposition that he was told about the existence of the restrictive covenants in Fishkin’s contract by TABFG’s lawyer, not by Fishkin, but that he never asked to see the covenants because he assumed they were no longer in existence. Anthony testified that he may have been aware of the existence of this lawsuit in May 2003, but did not see a complaint until the summer of 2003. 3/3/04 Dep. of Richard Pfeil at 10, 11, 12; 3/3/04 Deposition of William Anthony at 5, 9-10, 21-22, 26-27.

(5) Fishkin’s Disclosures to NT Prop Concerning His Trading Methods and Profitability at SIG

122. At one of the preliminary meetings between Fishkin and “NT,” some of the NT representatives, including Larry Nocek, asked Fishkin how profitable the trading strategy that he had used had SIG had been and how much money he had made that year. Fishkin told them he could not give them that information because of the confidentiality provisions in his contract. 4/23/07 Tr. at 108.

123. Nocek then pressed Fishkin as to how much money he made at SIG, asking him if it was more than $5 million. Fish-kin answered by saying “You’l