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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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Thu, 10/13/2011 - 12:20 | 1769904 TuesdayBen
TuesdayBen's picture

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

Thu, 10/13/2011 - 12:33 | 1769964 DormRoom
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

Thu, 10/13/2011 - 12:47 | 1770016 Storch
Storch's picture

He forgot to wipe.

The drive.

Heyoooooo

Thu, 10/13/2011 - 13:10 | 1770088 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

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

Thu, 10/13/2011 - 13:20 | 1770113 redpill
redpill's picture

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

 

Thu, 10/13/2011 - 13:58 | 1770282 Steaming_Wookie_Doo
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.

Fri, 10/14/2011 - 03:16 | 1772621 fajensen
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!

Thu, 10/13/2011 - 14:13 | 1770364 trav7777
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

Thu, 10/13/2011 - 12:21 | 1769905 HANKREARDON
HANKREARDON's picture

That stinks.

Thu, 10/13/2011 - 12:37 | 1769975 GeneMarchbanks
GeneMarchbanks's picture

Pu was flushed from the inside.

Thu, 10/13/2011 - 13:43 | 1770165 redpill
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!

Thu, 10/13/2011 - 12:21 | 1769906 legal eagle
legal eagle's picture

Their work belongs in the sewer.

Thu, 10/13/2011 - 13:12 | 1770096 Nascent_Variable
Nascent_Variable's picture

Citadel security doesn't take crap from anyone.

Thu, 10/13/2011 - 13:35 | 1770160 Greater Fool
Greater Fool's picture

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

Thu, 10/13/2011 - 12:22 | 1769910 ziggy59
ziggy59's picture

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

Thu, 10/13/2011 - 12:34 | 1769969 redpill
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.

Thu, 10/13/2011 - 12:36 | 1769974 DormRoom
DormRoom's picture

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

Thu, 10/13/2011 - 12:31 | 1769926 Smithovsky
Smithovsky's picture

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

Thu, 10/13/2011 - 12:40 | 1769990 redpill
redpill's picture

Don't forget Fook Mi and Fook Yu!

 

http://www.youtube.com/watch?v=vj1SyWntdo4

Thu, 10/13/2011 - 13:10 | 1770083 DOT
DOT's picture

.

Thu, 10/13/2011 - 16:36 | 1771055 Freddie
Freddie's picture

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

Thu, 10/13/2011 - 12:26 | 1769928 homersimpson
homersimpson's picture

Ben Pu, meet Hu Flung Dung in Shawshank..

Thu, 10/13/2011 - 12:29 | 1769949 redpill
redpill's picture

And don't forget Kum Fum Sum Yung Gai.

 

Thu, 10/13/2011 - 12:35 | 1769971 carbonmutant
carbonmutant's picture

Probably related to Won Hung Lo...

Thu, 10/13/2011 - 12:28 | 1769935 redpill
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.

Thu, 10/13/2011 - 12:34 | 1769954 hedgeless_horseman
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.

Thu, 10/13/2011 - 12:42 | 1769995 redpill
redpill's picture

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

Thu, 10/13/2011 - 12:49 | 1770025 karzai_luver
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

 

 

Thu, 10/13/2011 - 12:28 | 1769936 ian807
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.

Thu, 10/13/2011 - 12:28 | 1769941 Sabibaby
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?

Thu, 10/13/2011 - 12:33 | 1769966 Smithovsky
Smithovsky's picture

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

Thu, 10/13/2011 - 12:58 | 1770054 karzai_luver
karzai_luver's picture

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

 

Fri, 10/14/2011 - 03:46 | 1772635 fajensen
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.

Thu, 10/13/2011 - 12:34 | 1769945 bartek
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)

Thu, 10/13/2011 - 12:29 | 1769946 fuu
fuu's picture

Bullish for shit.

Thu, 10/13/2011 - 12:30 | 1769947 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Here's the code right here:

 

while( Ponzi == true )

{

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

// Ponzi = false;

}

Thu, 10/13/2011 - 12:30 | 1769951 PicassoInActions
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

Thu, 10/13/2011 - 13:02 | 1770065 slewie the pi-rat
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

Thu, 10/13/2011 - 13:05 | 1770076 redpill
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.

Thu, 10/13/2011 - 13:13 | 1770102 Larry Dallas
Larry Dallas's picture

Anyone remember Bang Dae Ho?

Thu, 10/13/2011 - 13:21 | 1770118 redpill
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.

Thu, 10/13/2011 - 12:30 | 1769952 vegas
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.

Thu, 10/13/2011 - 13:06 | 1770078 redpill
redpill's picture

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

Thu, 10/13/2011 - 12:31 | 1769957 bartek
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

Thu, 10/13/2011 - 12:39 | 1769987 hedgeless_horseman
hedgeless_horseman's picture

...and $2 brokers.

Thu, 10/13/2011 - 12:32 | 1769959 carbonmutant
carbonmutant's picture

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

Thu, 10/13/2011 - 12:33 | 1769965 Ramboy
Ramboy's picture

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

Thu, 10/13/2011 - 12:34 | 1769968 Pythaes
Pythaes's picture

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

Thu, 10/13/2011 - 12:59 | 1770059 redpill
redpill's picture

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

Thu, 10/13/2011 - 15:47 | 1770812 Pythaes
Pythaes's picture

what was on them?

Thu, 10/13/2011 - 12:35 | 1769972 Mugatu
Mugatu's picture

He should have thrown it in the same lake as OJ's knife and he would get of scott free!

Thu, 10/13/2011 - 12:38 | 1769984 Schmuck Raker
Schmuck Raker's picture

<== OVER

<== UNDER

Will get more or less time than Raj Raj's 132 months?

[Hint: He stole from a Wall Strret firm]

Thu, 10/13/2011 - 12:44 | 1770001 youngman
youngman's picture

I think right now this is 40% of the market....it is sure not the fundimentals....its computers vs computers...

Thu, 10/13/2011 - 12:48 | 1770019 caconhma
caconhma's picture

There is no honour among thieves.

Thu, 10/13/2011 - 12:52 | 1770034 karzai_luver
karzai_luver's picture

NO PU!

 

Thu, 10/13/2011 - 12:51 | 1770033 Problem Is
Problem Is's picture

Pu's career must be going down the shitter...

Thu, 10/13/2011 - 12:55 | 1770041 slaughterer
slaughterer's picture

Only problem is that when you get the alpha code, you need to have about $200 m of server power to run it.  

Thu, 10/13/2011 - 12:57 | 1770052 Downtoolong
Downtoolong's picture

It's the Chinese way, the student learns from the Master.

Besides, I thought it was OK for one thief to steal from another.

Thu, 10/13/2011 - 13:00 | 1770053 Everybodys All ...
Everybodys All American's picture

and there you have it. The Citadel admitting that they have software to front-run the stock market. This is akin to a drug dealer calling the cops and saying some criminal stole all their drugs. The SEC and FINRA are worthless piles of Ben Pu if they can't figure this one out.

Thu, 10/13/2011 - 13:06 | 1770077 AldoHux_IV
AldoHux_IV's picture

I guess we'll have to come up with a new language that skynet is not aware of yet to fool the bastard, ebonics?

Thu, 10/13/2011 - 13:11 | 1770091 wang (not verified)
wang's picture

sanitary canal

WTF was it found by an Asian Carp?

Thu, 10/13/2011 - 13:42 | 1770109 NuYawkFrankie
NuYawkFrankie's picture

 

 

A cute little techie Ben Pu

Took Citadel's code and he flew.`

The cheeky young pup,

Then set himself up

As "Ben Pu Du Flunt-Lunning fu Yu"

Thu, 10/13/2011 - 13:29 | 1770117 wang (not verified)
wang's picture

I wonder how Shaw protects the family jewels in his India operation?

 

www.deshawindia.com/

lol

http://www.wallstreetoasis.com/forums/de-shaw-background-check-process-s...

Thu, 10/13/2011 - 13:23 | 1770125 Vergeltung
Vergeltung's picture

well, the real question is, does Pu know Bang Dae Ho?

 

Thu, 10/13/2011 - 13:29 | 1770138 reader2010
reader2010's picture

Heard from a friend who worked in China for about four years that he hasn't met any Chinese who doesn't steal. Stealing is their second nature perhaps.

Thu, 10/13/2011 - 13:30 | 1770143 disabledvet
disabledvet's picture

In an interesting sidebar "we have also learned he is currently working with the Department of Defense in an operation only known as 'Virtual Room Clearing.'" more details as they get it.

Thu, 10/13/2011 - 13:41 | 1770178 Catullus
Catullus's picture

I wish I could be on this jury. "so you're saying Mr Pu 'stole' and by 'stole' you mean remembered a code that you use to time the market and make trades off of?" Fuck-a-doodle-doo. You should have paid that guy so much that he never would have left. Oh. You didn't want to and he went to a competitor to replicate the process? Eat donkey shit. Pay your employees more and they won't jump ship.

Thu, 10/13/2011 - 13:47 | 1770207 slewie the pi-rat
slewie the pi-rat's picture

they may have found the hard drives near where the wedding scene was in The In-Laws w/ peter falk & alan arkin et al

so, that fits...

...he may have tossed them into the canal when he knew he couldn't make it to the sub...

Thu, 10/13/2011 - 14:02 | 1770300 adr
adr's picture

automated trading platforms, no human involvement. It's like leaving a factory running 24/7 making an endless suply of product nobody uses just so you can say youre producing something.

Are the regulators afraid that if you shut down the Algo mills the market will cease to exist? It won't, it will just remove the ability for a stock to double in two months based on nothing but computers fighting over a fraction of a cent.

Thu, 10/13/2011 - 14:09 | 1770338 LongSoupLine
LongSoupLine's picture

Mean while, back at SEC HQ and Holders office at DOJ...

 

"zzzzzzzzzz"

Thu, 10/13/2011 - 15:05 | 1770567 lolmaster
lolmaster's picture

KG living up to his Loeb inspired gulag reputation. The idea that someone smart enough to work in their HFT unit would 1) dump code onto a thumb drive, 2) get tailed by some monkey, 3) dump the drive in a sewer when t could be physically destroyed instead 4) and right after another junior employee had been accused of same recently, is absurdly laughable. Sounds more like putting the squeeze on a soft target fobbed out H1B

Thu, 10/13/2011 - 16:41 | 1771084 Fíréan
Fíréan's picture

Last year the newest employee at Citadel, Mr. Pu was fired for talking to a competitor.

 

 

Citadel fired one of its newest employees today after allegedly discovering that he was speaking to rival firm Teza Technologies, the firm founded by Mikhail "$150 million in 2008" Malyshev.

 Malyshev and Citadel have been in legal dispute for years now. When Malyshev and a colleague left Citadel in February 2009 to start their own fund, Citadel founder Ken Griffin sued him, arguing that he signed a non-compete. (Malyshev had made Citadel over $1 billion in 2008, taking home $150 million for himself, according to legal complaints.)

Quoted from business insider.com

http://tinyurl.com/3lgmgds

 

Thu, 10/13/2011 - 17:55 | 1771385 Buck Johnson
Buck Johnson's picture

This is insane, no wonder the market is the way it is.  All it's doing is front running orders to make money faster than the trade coming in. 

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