Lawyers for Citadel Investment Group LLC on Friday called on a judge to temporarily shut down a high-frequency trading firm started by two former employees who earlier this year left to set up their own business.

"What we've got here is a veritable pirate ship of illegal activity," said Citadel lawyer Brian Sieve in closing arguments after a multi-day hearing before a Chicago court.

Attorneys for the firm, Teza Technologies LLC, retorted that the legal case Citadel is pursuing against it is aimed at sending a message to those who dare to leave the giant hedge fund firm.

"This is about a $15 billion hedge fund that brought an army of lawyers to bear on two guys who chose to leave Citadel," said Chris Gair in closing arguments Friday.

Chicago-based Citadel has alleged that Mikhail "Misha" Malyshev and Jace Kohlmeier violated their non-compete agreements after leaving to head Teza.

Sieve argued Friday that Teza's founders plotted to poach Citadel employees and develop competing high-frequency trading strategies, while keeping their activities secret from their former employer.

He called upon Judge Mary Rochford to enforce the ex-Citadel executives' non-competes, and to shut down Teza's operations for a period of nine months - the length of the defendant's non-compete agreements with Citadel.

Denying charges that the defendants tried to recruit from Citadel or breached their fiduciary duties, Gair said that an injunction to shut down Teza's operations for that long would be a "mortal blow" to the company and its employees.

"This business will be effectively destroyed before it gets off the ground if the court issues the injunction (Citadel is) asking for," said Gair.

Malyshev and Kohlmeier helped expand Citadel's high-frequency trading group into a unit that returned $1 billion in 2008, even as the company's flagship hedge funds lost 55% amid the global financial turmoil.

High-frequency trading, driven by computer programs, seeks profits through rapid-fire transactions across multiple exchanges and trading venues. It has helped banks and proprietary trading firms earn healthy returns as the broader market struggled.

Malyshev and Kohlmeier departed Citadel's high-frequency group, called Tactical Trading, in February and formed Teza a month later.

According to court testimony, the firm had targeted a Dec. 1 start date for trading - safely beyond the mid-November end date for the former Citadel executives' non-competes - and targeted $100 million in trading revenues for 2010.

Lawyers for Teza have argued this week that the work being done at the firm amounted only to building infrastructure - hiring employees, testing software and connectivity tools, and evaluating high-speed connections to exchanges.

Teza maintains that it has done no work on developing trading strategies, which would put Malyshev and Kohlmeier in violation of their non-competes with Citadel.

Sieve also alleged Friday that Malyshev committed perjury, with the Teza founder first saying in an affidavit that he didn't delete computer files covered by a July document-preservation order, then admitting in later testimony that he did after panicking about pornography contained in his computer.

Sieve requested that the court impose a "significant fine" on Malyshev, noting that the defendant in 2008 earned "in excess of seven figures" per week. That translates to at least $52 million.

Gair acknowledged that Malyshev didn't tell the truth on that matter, but called it a "distraction from real issues of the case."

Another Teza attorney, Greg Boyle, requested a monetary sanction that "fits the wrongdoing" but said it should be borne by Malyshev alone, as opposed to Teza or Kohlmeier.

After arguments concluded Friday, Judge Rochford said her decision would be forthcoming, though she didn't lay out a time frame.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117

(Jamie Heller contributed to this article.)