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A legal battle is brewing in the small, but troubled, world of direct access trading.
Sonic Trading, a small outfit started by two traders who helped launch Datek Online Holdings Inc., is being sued by a subsidiary of their former employer. Watcher Technologies LLC, one of the biggest direct access providers and a subsidiary of Datek, claims that Sonic has stolen technology it obtained while launching Datek. That technology is now being used by Watcher.
Sonic's founders, Joseph Cammarata and Louis Liu, said that they've managed to lure some business from Watcher, which they believe is the real source of Datek's ire. With the erosion of retail- oriented day trading, direct access trading has been hit hard, making competition more keen. But Cammarata said that the allegations of theft are "absurd." For its part, Sonic is currently pursuing a Rule 11 motion in federal court, which claims that the charges are frivolous and have been brought without fact or just cause.
"Their claim is that we stole software eight years ago," said Cammarata, referring to the time he and Lieu worked with Datek. Today, Wall Street-based Sonic Trading, which Cammarata and Liu started in 1999, has...