Wednesday, 21 January 2015

Ex-Citadel Employee Gets Three Years for Data Theft

Andrew Harris, Bloomberg

USA - A former Citadel LLC employee who admitted stealing data from the Chicago-based investment firm as well as high-frequency trading computer code from a New Jersey company was sentenced to three years in prison.

Yihao “Ben” Pu, who was charged in 2011, pleaded guilty in August to stealing proprietary information from Citadel in 2011 and to an earlier theft of trade secrets from Red Bank, New Jersey-based Tradeworx Inc.

Pu, 27, apologized to both companies as U.S. District Judge Charles Norgle in Chicago handed down the punishment today. He told the judge the thefts were “the most regrettable actions” of his life.

“I’ve paid a price for this case, personally, professionally, financially,” Pu said.

Citadel, founded by billionaire Kenneth C. Griffin, manages more than $24 billion, according to its website. Pu worked for the firm as a quantitative financial engineer from May 2010 to August 2011.

Prosecutors sought a sentence from seven years and three months to nine years, citing the loss to the two firms. Citadel said in a letter to Norgle that the firm had spent more than $10 million on research and development of its stolen data.

Pu’s lawyers said the companies lost no more than $2,000. Norgle concluded that the loss was around $12 million total. Pu must surrender to prison by May 1.

Obstructed Probe
A co-defendant, Sahil Uppal, who in August pleaded guilty to obstructing a criminal investigation, was sentenced today to three month’s probation. Pu and Uppal worked together at Tradeworx before joining Citadel four months’ apart in 2010. By the time he’d arrived at the firm, Pu had taken code from Tradeworx, he told the court at his August plea. Uppal admitted he wrote code for Citadel, then secretly transfered it to a computer he and Pu used. In August 2011, Citadel officials confronted Pu with suspicions he’d stolen data and told him to return it. Uppal and a person who wasn’t identified later removed computer hardware from Pu’s apartment, including hard drives with the firm’s confidential information, Assistant U.S. Attorney Lindsay Jenkins told Norgle during Uppal’s August hearing.

The two must repay Citadel a total of almost $760,000 to cover the cost of its investigation, the judge said.

Katie Spring, a Citadel spokeswoman, declined to comment on the sentences. Tradeworx didn’t immediately respond to a voice-mail message.

The case is U.S. v. Pu, 11-cr-00699, U.S. District Court, Northern District of Illinois (Chicago).