Former Citadel employee Yihao Ben Pu faces up to 20 years in prison after pleading guilty to stealing secret quantitative information from the Chicago-based hedge fund and another firm, Bloomberg News reports.
Pu entered into the plea agreement with federal prosecutors on Thursday.
While admitting that he stole codes from Citadel, he also confessed that he had taken codes from an unnamed New Jersey-based firm, the report said.
Pu now faces up to a combined 20 years for each of the two counts. He also faces up to $US500,000 in fines for the two counts, according to Bloomberg News.
In 2011, federal authorities arrested Pu, a former quantitative engineer, for stealing sensitive information from about the fund’s computer-driven trading strategies and downloading them to his personal devices before attempting to destroy them.
He attempted to destroy those devices by throwing them into a sanitary canal, ABC channel 7 in Chicago reported. Divers were able to retrieve the external devices that contained Citadel’s alphas.
Citadel, which is run by billionaire Ken Griffin, is known for being incredibly secretive.
In Michael Lewis’ book “Flash Boys” there’s a detail about how it takes five swipes just to get to the trading floor.
“I read that passage in the book and thought how many card swipes does it take. One from the garage, the main floor, one to the turnstile, one to the elevator floor, and two to get to the desk, to the trading division. Again, the book is a great story. We obviously pay a lot of attention to protecting our intellectual property,” Griffin said at the CNBC Delivering Alpha conference last month.
He added that it’s incredibly important for him to protect his fund’s computer code.
“You know all this is, is idea, thoughts and concepts expressed in computer code. And unfortunately, that intellectual property is readily moved, and it’s very important for us to protect it,” Griffin explained, adding, “Think about how much of an effort Coca-Cola makes to protect the recipe for Coke. We have to do the same thing to protect our intellectual property.”
You’ve been warned.
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