Citadel earned about $1 bln from high frequency trades-WSJ

Oct 2 (Reuters) - Citadel Investment Group LLC earned about $1 billion last year from a unit involved in high frequency trading, the Wall Street Journal said, citing the testimony of a former employee of the hedge fund firm.

According to the Journal, Mikhail Malyshev, a former Citadel trader and accused by the firm of violating non-competitive agreements, testified in a Chicago court that the unit also posted returns of $892 million in 2007, up from $75 million in 2005, and about $3 million in 2004.

The Journal did not name the unit.

The Journal said Citadel's senior investment manager, James Yeh, and Malyshev, who has denied Citadel's charges, also gave details about the unit's activities, including strategies such as European options trading.

In September, U.S. securities regulators proposed a ban on flash orders that stock exchanges send to a select group of traders, fractions of a second before revealing them publicly. [ID:nN1778693]

Citadel was not immediately available for comment outside regular U.S. business hours. (Reporting by Biswarup Gooptu in Bangalore; Editing by Anshuman Daga)