2nd UPDATE: Ex-CME Programmer To Plead Not Guilty On Code Theft Charges - Lawyer
July 08 2011 - 6:18PM
Dow Jones News
A former computer programmer for CME Group Inc. (CME) intends to
plead not guilty to 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.
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 to speculate on market
movements.
According to the complaint, 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.
Yang, 49, appeared in a Chicago court on Friday, wearing a baggy
orange jump suit and ankle shackles. Yang's attorney, Christopher
Graul, said his client intended to plead not guilty to the
charges.
Magistrate Judge Michael Mason ordered Yang released on $500,000
bond later Friday, putting him on 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 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 Yang.
The case highlights the critical 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 (GS), 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 Societe Generale SA
(SCGLY, GLE.FR), where he worked as a trader.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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