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Hedge fund analyst jailed for stealing lines of code

A 28-year-old hedge fund analyst has been jailed for four years for fraud after accessing restricted files and copying valuable code used in trading algorithms, the Financial Times said06 Jul 2015

Ke Xu copied the code and deleted a large number of files while working for hedge fund operator Trenchant in London, the newspaper said.

Xu had become unhappy with his employer after being paid a £400,000 bonus, when he felt he should have been paid £1.1 million, the report said. After accepting another job, in Hong Kong, he deleted around 150,000 documents and was seen on the company's CCTV as he took a large suitcase from the building, the Financial Times said.

Xu was arrested in Hong Kong just over a week after he resigned from the fund, the Financial Times said.

"While your offending may fall short of what is known as 'copying and carrying away', it is plain that in Trenchant's mind you took something of very high value and it must be the case that that was your intention because you would not have acted as you did unless you believed that you could at least try to deploy the strategies elsewhere," the judge said, according to the Financial Times.

Algorithmic trading is a term used to describe the ultra high-speed computer-based process of analysing market data and determining the timing, prices or quantities of orders that traders should place on assets. 

The trading of assets based on algorithm-based data crunching is to be subject to greater controls under proposals backed by the European Parliament. Reforms to the Markets in Financial Instruments Directive (MiFID II) aim to ensure that changes in technology that have allowed for higher speed trading of assets are subject to greater controls and new liquidity requirements.