The gloves are now completely off in the escalating program trading fiasco that was started by Goldman's former Sergey Aleynikov. Oddly, while Zero Hedge was fully expecting the Teza injunction to come from Goldman, it seems Griffin was more than happy to burden himself with that task. Hopefully Citadel is not faced with a case of reverse discovery and forced to document the 40% returns that it generated compliments of Malyshev when all its other groups on average lost around 50% in 2008. From Bloomberg:

Citadel Investment Group LLC, the $12 billion hedge fund firm founded by Ken Griffin, sued three former executives and the firm they founded, Teza Technologies LLC, claiming violation of non-competition agreements.

“This is a case of industrial espionage,” Citadel said today in a 25-page complaint. The firm seeks a court order barring the individual defendants from conducting any business through Teza or related entities that compete with Citadel, for the duration of the agreements.

Teza described itself in a July 6 e-mail as a “formative” firm that is neither trading nor investing. Named after a river in western Russia, the Chicago-based firm was co-founded by Misha Malyshev, Jace Kohlmeier and Matt Hinerfeld. All were named in the complaint.

“We didn’t violate any non-competes,” their attorney Chris Gair said today in a telephone interview. He said his clients took no trade secrets from Citadel.

Malyshev worked at Citadel for almos six years and until February was its head of high-frequency trading.

He was on the team that ran a $1.8 billion tactical trading fund that uses computer model to make trades every few seconds. The fund climbed 40 percent last year, while its main funds tumbled 55 percent.

U.S. agents arrested ex-Goldman Sachs Group Inc. computer programmer Sergey Aleynikov on July 3, one day after he started working for Teza, on charges he stole trading software from Goldman.

Teza said in the July 6 statement it suspended Aleynikov without pay after the arrest. The firm said it learned of the allegations on July 5.

“It had nothing to do with us,” Gair said of the Aleynikov matter. The case is Citadel Investment Group LLC v. Teza Technologies LLC., 09CH22478,

Chancery Division, Cook County, Illinois, Circuit Court, (Chicago).

Zero Hedge is currently going through Chancery Court filings and will present when and if it discovers anything perticularly juicy.