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Business News

Lawsuit fuels Cantor feud with ICAP

The long-running feud between the brokers Cantor Fitzgerald and Icap intensified yesterday when Cantor confirmed it had filed a law suit in America claiming its arch rival had infringed a patent on its electronic broking technology.

Cantor's latest objection concerns its sister company eSpeed, which competes in the US money market with BrokerTec, which was bought by Icap in early May for £180m.

The complaint, filed in a US District Court in Delaware, accuses BrokerTec of infringing a patent by using "systems and methods that embody or use the invention" without authorisation.

This is the latest twist in the high-profile spat between the two brokers which first hit the headlines after 11 September 2001, when Cantor won the sympathy of the world when 658 of its staff died in the terrorist attacks.

Icap successfully poached three of Cantor's most successful brokers in the ensuing months, prompting Cantor to launch legal proceedings claiming Michael Spencer, chief executive of Icap, had hatched a plan to undermine it by deliberately picking off its best employees.

The case, which came to court last summer, revealed sordid details of the way some members of the high-octane money broking world appeared to spend their time outside work, including taking drugs on a regular basis and visiting lap-dancing clubs.

The famous mutual dislike between Mr Spencer and Lee Amaitis, European president of Cantor, has also been revealed in a separate court case at London's High Court at the moment, which was brought by a former Cantor employee who alleges he was bullied into leaving the firm.

Last week Mr Amaitis vigorously denied he had considered an offer by one of his advisers to find a hitman to "take care" of Mr Spencer.

Cantor will give its closing arguments in the case against a former employee, Steven Horkulak, today. Mr Horkulak, who was a senior managing director at Cantor before leaving in June 2000, is claiming £1.5m in compensation for alleged constructive dismissal.

Mr Horkulak's lawyers will also sum up his argument today, although a judgment is not expected for some weeks.

Icap said in a statement about the latest clash over the patent that Cantor's allegation of the patent was "baseless" and suggested Cantor was resorting to taking out a law suit because it now faces stiff competition in the US treasuries market. Icap pledged to "vigorously defend itself against this unnecessary litigation".

ESpeed is seeking an order directing BrokerTec to stop operating its electronic trading system, saying it infringes on an eSpeed patent that protects some eSpeed proprietary systems and electronic trading methods.

The two electronic brokerage units compete for customers in the $3 trillion market for US government securities and the $2.4 trillion market for debt sold by agencies such as Fannie Mae and Freddie Mac.