Ex-CME Programmer to Plead Not Guilty in Code-Theft Case

[scandal 951]

I bet there's lots of illicit buyers for source code to the major exchange matching engines. China would not be the only interested party.

This article is from a few weeks ago.

Ex-CME Programmer to Plead Not Guilty in Code-Theft Case

By JACOB BUNGE

A former computer programmer for CME Group Inc. intends to defend himself against charges that he stole data from the futures exchange company, the man's lawyer said Friday.

Chunlai Yang, a senior software engineer who worked at CME for 11 years, stands accused by the U.S. government of downloading proprietary source code underlying CME's markets, part of an alleged plan to build a new derivatives exchange in China.

Mr. Yang, a Chinese national with U.S. citizenship, was arraigned on the charges last week following an investigation by the Federal Bureau of Investigation. CME began closely monitoring his computer activity in early May, according to the complaint filed against him.

CME is the world's largest operator of futures exchanges, in terms of trading activity. Banks, asset managers and energy companies trade CME's futures contracts to guard against shifting commodity prices and interest rates, or speculate on market movements.

According to the complaint, Mr. Yang worked on technology powering CME's front-end trading systems until the company fired him in conjunction with the allegations. CME worked with legal authorities in the investigation.

"The company has found no evidence that customer information, trading data or required regulatory information was compromised," a CME spokesman said Friday.

Mr. Yang, 49 years old, appeared in a Chicago court on Friday, wearing a baggy orange jump suit and ankle shackles. Mr. Yang's attorney, Christopher Graul, said his client intended to plead not guilty to the charges.

Magistrate Judge Michael Mason set a Tuesday bond hearing for Mr. Yang, who listened to a translator as Judge Mason said he may be inclined to release Mr. Yang to home detention with an electronic monitoring device.

An indictment on the charges is expected sometime in the next month, after which point the case could go before a grand jury.

The complaint alleges that Mr. Yang was in talks with several individuals who planned to use CME's source code to establish East China Technology Innovation Park Co., aiming to build a futures exchange and software company where Yang was to be the "lead technical person."

CME declined to comment on whether the company would pursue its own legal action against Mr. Yang.

The case highlights the importance of computer code to trading operations and is the latest in a series of hard-fought legal cases over alleged theft.

Sergey Aleynikov, a former computer programmer for Goldman Sachs Group Inc., was found guilty in December of stealing algorithmic trading code from the bank ahead of his departure to join a new high-frequency trading firm. He received an eight-year prison sentence in March.

In February, Samarth Agrawal received a three-year prison term for taking code from French banking group Société Générale SA, where he worked as a trader.

[rsn 135]

It's a shame that people are more interested in stealing code than being innovative and developing a new and better system. This guy wasn't a software engineer, he was a code monkey.

Edited August 3, 2011 by rsn

[scandal 951]

It's a shame that people are more interested in stealing code than being innovative and developing a new and better system. This guy wasn't a software engineer, he was a code monkey.

The office gossip I was hearing surrounding this case was that what we need to fear is not the Chinese getting the code, but rather competing trading firms. The exchanges these days are going to extraordinary lengths to present fair and level access to all participants. They go so far as to dictate that all cable lengths have to be identical. So, for example, if you are a trading firm colocated one cage over from the exchange's FIX servers, but your competitor is in a cage 300 yards away, then the cross-connect to your cage will have 300 yards of fiber spooled to give you both the same effective cable length, and hence transmission latency. The game is being played at such exacting levels these days. Now in a scenario like that, how much do you think the source code to the exchange's matching engine code (the software that's deciding how to prioritize and handle competing inbound orders sent by rival trading firms) is going to be worth to an unscrupulous firm who wants a leg up over everyone else? Quite a lot, I can assure you.

[mawilson 2,133]

It's a shame that people are more interested in stealing code than being innovative and developing a new and better system. This guy wasn't a software engineer, he was a code monkey.

Have you ever met a Chinese programmer who wasn't a code monkey?

The Chinese are incapable of creating anything original.

[Ban Hammer 13,651]

Have you ever met a Chinese programmer who wasn't a code monkey?

The Chinese are incapable of creating anything original.

who invented gunpowder?

[mawilson 2,133]

who invented gunpowder?

Got anything more recent?

[Ban Hammer 13,651]

Got anything more recent?

peking duck.

[mawilson 2,133]

peking duck.