NEW YORK (Reuters) - Authorities in New York have accused a 28-year-old former quantitative analyst of stealing information about the algorithmic trading models used by the $14 billion hedge fund where he worked, according to court documents.
Manhattan District Attorney Cyrus Vance charged the former analyst, Kang Gao, on February 12 with two counts each of computer trespassing and unlawful duplication of computer related material and one count of unauthorized use of secret scientific material, according to the court filing.
The hedge fund where Gao worked, Two Sigma Investments, fired him two weeks ago and sued him last week in state court on claims he stole confidential information. Gao stole information about the trading programs “as part of an apparent plan to take that information to a new employer, either one of Two Sigma’s competitors in the United Kingdom, or to start his own business in China,” Two Sigma’s suit said.
Gao’s lawyer did not immediately respond to a request for comment.
Gao was arrested last week. He was arraigned in criminal court on February 12 and is scheduled to be arraigned in New York Supreme Court on indictment on March 11.
The charges say Gao copied information about Two Sigma’s trading programs and emailed it to a personal email account. He also emailed himself a scientific white paper on methods and applications of financial modeling, as well as an internal presentation from Two Sigma on its market outlook.
Two Sigma’s suit said Gao admitted to improperly accessing the information about its trading models.
“In light of Gao’s pattern of flagrant misconduct, Two Sigma fears that as soon as he is released from prison, he will take additional actions to try to capitalize on the information he has already stolen, including by transferring it to individuals outside Two Sigma,” the suit said. It was filed on Friday. In it, Two Sigma demanded the right to retrieve the secret information Gao took along with Gao’s compensation.
According to Two Sigma’s suit, Gao began working at the firm in August 2010 and earned “several hundreds of thousands of dollars” while employed there.
Reporting By Emily Flitter; Additional reporting by Nate Raymond and Karen Freifeld; Editing by Cynthia Osterman