A second Citadel Investment Group high-frequency trading programmer has pleaded guilty to charges that he sought to cover up a scheme to steal the firm’s secret computer algorithms. Sahil Uppal pleaded guilty yesterday, August 13, for obstructing an investigation into the actions of his colleague, Yihao Pu. Pu himself pleaded guilty last week of taking proprietary information from Citadel, a group which manages more than $20 billion in assets.
Pu, age 26, who was first charged in 2011, admitted to taking the proprietary information from Citadel that year, as well as to an earlier theft of trade secrets from an unnamed firm based in New Jersey, that developed HFT infrastructure software. With his plea before the U.S. District court, Pu avoided a trial scheduled for September. He faces up to a 10-year prison sentence and a fine as high as $250,000 on each of the two counts.
One Bank to Rule Them All: Atlas Bank Outlines 2020 StrategyGo to article >>
Uppal, who worked with Pu at the New Jersey investment technology firm, before both moved to Citadel within months of one another in 2010, said he had transferred three quantitative trading scripts he wrote for Citadel to Pu without permission. When Citadel’s representatives confronted Pu in 2011 about his activities, Uppal and another person went to Pu’s apartment to remove the computer equipment. Each programmer had signed a non-disclosure agreement (NDA) when they started their work, pledging not to use Citadel’s confidential information for anyone else’s benefit including their own.
According to court documents from yesterday, after the judge told Uppal he faced as much as twenty years of jail time and a maximum fine of $250,000, he asked: “What have you decided to do?” To which Uppal answered: “I have decided to plead guilty.” Uppal and Pu will both be sentenced on November 7.
U.S. prosecutors have recently started cracking down harder on intellectual property theft from financial firms, with the Manhattan District Attorney office alone having charged at least four analysts or programmers in connection with theft of code. Furthermore, disputes that used to be resolved in contract litigation are now being criminalized, according to Bloomberg. This legal trend has yet to reach the retail trading industry, but is a common fear expressed by many investors. How can they know if a contracted programmer, in charge of coding their secret and personally developed trading algorithms for an MT4 Expert Advisor (EA) or another type of platform is not keeping the code for his own use or for selling to other clients?