I picked Farengar Secret-Fire's pocket to obtain a key so I could get to the Whispering Door. I was sneaking and hidden at the time so I'm not sure how he saw me. No alarms were raised and I'm still in good standing in Whiterun where he resides. No bountys. The contract said they didn't have to kill me, but to at least rough me up. I killed all 3 bandits and wished I could have stolen there stuff as well because they had some expensive toys. I had just finished a mission and I was loaded down with loot.