Ex-Two Sigma Quant Tweaked Models to Boost His Pay, US Says
A former Sigma Investments quantitative researcher was accused of secretly manipulating algorithmic investment models, thus providing higher return on their compensation than to inflate millions of dollars.
A indictment against the 34 -year -old Jian Wu was opened on Thursday in the Federal Court in Manhattan. Although prosecutors did not name WU’s former employer, a parallel case filed by the securities and stock exchange commission was employed by two Sigma during the alleged fraud and took place between November 2021 and August 2023.
“Wu’s employer, the employer of the company, trusted to take action with honesty while creating models for the use of the company,” Manhattan US lawyer Jay Clayton said. “Instead, Wu used its technical skills to deceive millions of employers.”
Prosecutors said that Wu is not in custody and is currently illegal. Patrick Smith, a lawyer who previously represented WU on a civil issue, did not immediately respond to messages looking for a maximum of 20 years of imprisonment.
Two Sigma representatives refused to comment on the case.
The accusations against Wu suggest that federal prosecutors have examined the behavior of individual quants more closely. In January, former Headlands Technologies LLC merchant Richard Ho allegedly stole the source code from this quantity company. HO took part in the Manhattan Federal Court on Friday for a conference planned to be held on July 13, 2026.
‘Significant change’ models
Between 2021 and August 2023, the indictment claims that WU has designed models that have been approved for the company and released for use, but later made changes in their parameters “significant changing their behavior. The claim of the indictment was to result in a higher performance of the models and a $ 23 million “inflated” 2022 compensation package.
Two Sigma said that in October 2023, investors, a company in the company manipulated the investment models of an employee, said that it damages $ 170 million to its customers. Wu later described himself as an employee, but rejected the responsibility of the losses in a court petition that forced the company to force the names of employees who communicate with investors and journalists. He said he plans to make allegations of insults against them.
Wu, in December 2023, “undertaken any loss, two Sigma’s weak controls and reckless investment decisions were the result of the decisively,” he said. It is a common practice for researchers to replace the models designed without approval.
Earlier this year, SEC said that two Sigma has waited for four years to address the security gaps brought to the agenda by the staff who said that many employees are not open to a database that hides parameters for some commercial models. The regulator recorded two Sigma events described in 2023. The company agreed to pay a total of 90 million dollars of civilian penalties to solve the SEC allegations and voluntarily paid $ 165 million to affected funds and accounts.
Wu, a permanent US resident and Chinese citizen, won a doctor from both the University of Southern California and the University of Cornell. The researcher, from April 2018 to August 2023, including the Vice President and Senior Vice President, held various positions in two Sigma.
In his petition, Wu said that it was paid 2022 compensation and also paid $ 2.8 million in 2021 and $ 4.2 million in 2020. His statements said his statements could make him unemployed in the risk protection fund industry ”.
The incident appeared with a decrease that became so tense among two Billionaire Founding Partners of Sigma that the firm reported it as a financial risk.
According to March 31, 2023, John Overdeck and David Siegel did not agree on the organization and successor plans of two Sigma. According to the file, tensions affected employees’ ability to fully implement basic research, engineering or business initiatives. Wu also pointed to the blood feud in the file.
“The insufficiency of the control of two Sigma in this area shows the dysfunction of two Sigma flowing from the dispute between Overck and Siegel,” he said.
Last year, the duo resigned from the daily administration and delivered the control to two new CEOs. A few months later, the new executives rejected 10% of approximately 200 employees or company employees after a comprehensive review of two Sigma’s business. He then returned to the company’s management committee.
Criminal Case USA / Wu, 25-CR-413, US Regional Court, the southern region of New York. SEC / Wu is 25-CV-7573. The US Regional Court is the southern region of New York.
With the help of Nicola M White.
This article was created from an automatic news agency feeding without changing the text.
