Meet "Ben Pu" - The Aleynikov Sequel: Quant Powerhouse Citadel Arrests Former Employee For Stealing "Alpha" Code

Tyler Durden's picture

Chicago hedge fund Citadel may not have the best of luck when it comes to running traditional financial businesses (it's recent disastrous foray into advisory and capital markets - nuf said), but when it comes to picking up nickels and dimes ahead of slower traders (yes there is a name for it, but for lack of immediate legal retaliation by an uber-sensitive Ken Griffin we will leave it to our readers' imagination) by virtue of faster computers and a massive collocated infrastructure, Citadel is second to none (well, except maybe now infamous Latour Trading). Which explains why it is so sensitive to any former employees "borrowing" its special sauce, aka the computer code that is the only thing that gives the hedge fund its fro... er, superior trading execution. It was only last year that the fund went all Friend-O on Misha Malyshev, whose Teza technologies was implicated as the future employee of one now legendary Sergey Aleynikov. Well, it is time for a redux. As Dow Jones reports, "a former technology employee of hedge fund manager Ken Griffin's Citadel LLC was arrested for allegedly stealing sensitive computer trade secrets from the company for his own personal use, the Department of Justice said. According to the complaint affidavit, 24-year-old Yihao Pu, also known as "Ben Pu," was found by Citadel's information technology department to have "downloaded several unauthorized programs," which allegedly allowed him to bypass Citadel's security protocols and transfer files or data from his Citadel computer to an external storage device."

As for where this was found...

Certain files recovered from hard drives disposed in a sanitary canal near the Wilmette Harbor north of Chicago contained "alphas" or building blocks of Citadel's automated electronic trading algorithms and strategies. They also indicated that Pu was attempting to construct a trading strategy similar to the one used by Citadel, the affidavit said.

That's right: the sewer. That's how serious Citadel is when people go stealing their alpha shit: it will dig through.. well, you get the picture.

There was a time when being involved in finance meant lending and borrowing. Those days are gone. Now it is all about scalping milliseconds here and nanoseconds there.

And woe to whoever stands in the way of SkyNet.

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TuesdayBen's picture

The Chinese are infiltrating.  They've even taken over the LPGA tour.

DormRoom's picture

He's climbin in your windows

He's snatchin your algos up

Tryna /sbin/dump -0u -f /dev/st0 /usr/src em so y'all need to

Hide your disks, Hide your drives. Hide your disks,

Hide your drives. Hide your disks,

Hide your disks, Hide your drives. Hide your /dev/null,

Cuz they're /sbin/dump -0u -f /dev/st0 /usr/src errbody out here

Storch's picture

He forgot to wipe.

The drive.


Bwahaha WAGFDSMB's picture

Yeah, what are the odds of this evidence not being planted?

redpill's picture

"Alpha" code for beta channel stuffing?  The irony...


Steaming_Wookie_Doo's picture

Yeah, no kidding. Found in the sewer?! Geez, not to mention, putting any hard disk or memory stick in the microwave for about 10 seconds would frazzle any data on the drive, regardless of where you flush it later. Note to self: never hawk your programming talents at Citadel.

fajensen's picture

No, It will not. You have to physically destroy the media containing the data. The blender for a memory stick, Tree-shredder for harddrives. Or burn them. But this takes time and preparation.

In the defence gear I worked with they had a "thermite pack": A sealed aluminium tube filled with thermite then routed to larger pouches of thermite around the secret bits. The case was high in magnesium too. Even then there was a $$$ "Hammer and Nail" tool permanently attached. Using the hammer on the "nail", one was supposed to punch out specific locations to smash the chips underneath, while being overrun and supposedly with the thermite ignition countdown running for assured destruction.

The microwave just fries the electronics on a HDD. Then They will take the platters out and plonk them in an identical HDD, which may be the best outcome for all parties concerned because this saves Them & You the inconvenience of putting you in some shithole like Bagram and rubberhosing the data out of you!

trav7777's picture

you can't wipe a drive...coercivity is so high on those that you will mechanically damage the platters before you actually erase the bits.  You have to melt/burn the things

GeneMarchbanks's picture

Pu was flushed from the inside.

redpill's picture

There once was a boy named Pu

He worked for a fund but wasn't a Jew

So when the shit hit the fan

He quickly got canned

Due to hard drives found in doo-doo!

legal eagle's picture

Their work belongs in the sewer.

Nascent_Variable's picture

Citadel security doesn't take crap from anyone.

Greater Fool's picture

Citadel generally is not an outfit to get on the wrong side of.

ziggy59's picture

Banks are the only ones allowed to steal. Steal from them or, look out.

redpill's picture

So while TPTB scramble to track down Lulsec "cyber terrorists" who launch the occasional DDOS attack, here we have companies like Citadel that no longer have anything to do with sound financial analysis but are nothing more than institutionalized, subsidized, legalized hackers who seek to exploit the electronic medium of financial markets on the backs of the rest of the investing world.  Not because they undertand fundamentals, or do rigorous analysis, but because they hire Chinese programmers to write their scam code.  What a joke.

DormRoom's picture

American Finance Association slogan: "We move bits around--and that's about fuck all. so you don't have to."

Smithovsky's picture

If he marries Karen Yu and she hyphenates her last name, she will be Mrs. Yu-Pu

Freddie's picture

Maybe he can go back to China to design sinking riverboats.

homersimpson's picture

Ben Pu, meet Hu Flung Dung in Shawshank..

redpill's picture

And don't forget Kum Fum Sum Yung Gai.


carbonmutant's picture

Probably related to Won Hung Lo...

redpill's picture

Frontrunning and screwing retail investors adds SUCH value to our economy.  We need more businesses like this, then surely the current robust recovery will only become more accelerated.

hedgeless_horseman's picture

I remember when frontrunning was illegal.  That was when the NASD back-office examiners had AEM on their laptops instead of tranny-porn.

redpill's picture

When the SEC says they are "working hard" most people don't take their meaning properly.

karzai_luver's picture

too bad this was stopped as there were many Obamanits waiting to bankroll the startups that would bring 10s of yobs before the next donation cycle peaks.


eating our seed corn bichezzzzz



ian807's picture

And I'm *sure* they compensated Mr. Pu fairly, from their point of view (giggle). Citadel is neither the first, nor the last hedge fund that's getting the rather expensive lesson that when it comes to programmers and quants, you have to pay to play and that means trader sized compensation and/or an equity stake for the programmer.

Get it, or go down in flames.

Sabibaby's picture

For are smart as some these people are it's suprising they throw out their hard drives into the sewer without writing zero's to them first. Hell, stick some magnets to the drive before you toss it out. Also, what the heck was it doing in the sewer and not his PC at home?

Smithovsky's picture

Mr. Pu thought it would be safer in the sewer, with his relatives.  

karzai_luver's picture

smart and seeming white hot stupidity exist in all,,,,,that's humans for ya!


fajensen's picture

Most smart people are not smarter than "normal people" when working outside of their domain, but they naturally still think that they are smarter than everyone else; a common expert fallacy. Investment advisers and other salespeople *love* that trait in highly-paid people.

bartek's picture

Maybe the guy was planning to sell each "alpha" for $20 million a pop to Huen Shue (well known chinese government agent)

fuu's picture

Bullish for shit.

FunkyMonkeyBoy's picture

Here's the code right here:


while( Ponzi == true )


SPY->Buy( rand() % 100 );

// Ponzi = false;


PicassoInActions's picture

Ben Pu

 now works for Apple so they wont get much luck with apple employers, he redesign the code into the SIRI and now he does all his trades by simply speaking to an iphone

slewie the pi-rat's picture

with a first name like Yihao, i woulda suggested he keep his name yeeeeehooowwpuuu!  just for the piratical beuaty of it all

redpill's picture

I hate to Pu Pu your idea, but with a name like that some may find it arrogant in a way, almost as if he thought his pu didn't stink.

Larry Dallas's picture

Anyone remember Bang Dae Ho?

redpill's picture

He and Ben are actually gay lovers and getting married in NYC this week.  They will be hyphenating, something Bang Dae Pu-Ho has been looking forward to for a long time.

vegas's picture

I've been hanging around sanitary canals for a long time and I've never found a hard drive filled with awesome algos. Must be digging through the wrong shit.

redpill's picture

Yeah, I think on that Dirty Jobs show they had an episode about the Citadel Recovery Team (tm).

bartek's picture

We should go back to the system based on 8's and 16' instead of pennies. That would throw a wrench into their operations

carbonmutant's picture

Sounds like ol' Ben was under constant surveillance...

Ramboy's picture

Engineering and computer department at all banks are 99% asians with thick bifocals all stuffed in 2 floors in Jersey City.

Pythaes's picture

Hard drives dumped into the Chicago River...Nice work....

redpill's picture

A scuba-diving Rahm found them at the bottom while he was looking for some more voters for the next election