Appeals Court Not Willing To Take Ken Griffin’s Word For It

Ex-Citadel analyst Yihao “Ben” Pu is going to be re-sentenced for stealing HFT code.
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But I said so.

Back in 2011, a young man named Yihao “Ben” Pu incurred the unrelenting wrath of Ken Griffin by stealing Citadel’s HFT code and using it to lose himself $40,000. KG’s buddies at the U.S. Attorney’s Office thought that this was serious enough to send a twentysomething kid to jail well into his 30s, and Citadel was only too eager to help, handing prosecutors a handy $12.7 million estimate of its losses on Pu’s scheme, one that just happened to call for a minimum sentence in excess of seven years.

The trial judge decided that might be just a little severe and sent Pu away for three years with a $750,000 bill for the internal Citadel investigation that came up with the $12.7 million figure. Only problem is, as far as the U.S. Seventh Circuit Court of Appeals is concerned, that number has no basis whatsoever in reality and may in fact be entirely made up. And so Pu may be getting out of jail considerably sooner than next March, and probably won’t be paying Citadel a dime.

Norgle relied on government evidence based on company-provided estimates of the research and development costs of the trade secrets Pu stole.

But the appellate panel questioned whether the cost of development was the correct loss amount because Norgle also found that there was insufficient evidence that Pu intended to use the trade secrets in some bigger scheme to enrich himself….

The appellate court concluded that the erroneous loss figure appeared to affect Pu's sentence. The 7th Circuit also said Norgle erred in ordering Pu to pay more than $750,000 in restitution to Citadel for the costs of its internal investigation.

Ex-Citadel financial analyst to be resentenced in trade secrets case [Chicago Tribune]

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