From the August 01, 2011 issue of Futures Magazine • Subscribe!

CME code stolen

Inside job

imageThe Federal Bureau of Investigation (FBI) arrested Chunlai Yang, a senior software engineer for CME Group, in July on charges of theft of trade secrets after CME Group alerted the FBI that a crime may have been committed. Yang is a naturalized U.S. citizen and Chinese national who has worked at CME Group since 2000.

According to the complaint, CME security began monitoring Yang’s activity in May and discovered he downloaded to his work computer thousands of files of source code and algorithms protected by CME’s Clear Case security system. Yang then downloaded some of those files to multiple flash drives. The complaint states that some of these files included trade secrets that Yang had no need to access to fulfill his job functions.

Some of the trade secrets included source code that supports CME’s electronic trading system.

CME Group stated in a release: "CME Group places a high value on protecting its intellectual property and trade secrets. As soon as the company became aware of and confirmed the suspicious activities of one of its employees, CME Group cooperated with law enforcement authorities and moved to terminate the individual’s employment." It goes on to state, "The company has found no evidence that customer information, trading data or required regulatory information was compromised."

Yang also had been in e-mail contact with the assistant director of the Logistics and Trade Bureau for the Zhangiagang Free Trade Zone as far back as the summer of 2010 and shared protected source code and proprietary information. As part of that e-mail chain there are documents that "appear to be incorporation papers for an entity entitled ‘East China Technology Innovation Park Co. Limited’. The documents indentified Yang and [two others] as sole directors and shareholders" according to the complaint.

Tim Mulholland, managing partner at China-America Capital Company, says piracy of intellectual property has been a big problem in China for many years and has caused some firms to think twice about doing business there. However, the Chinese government actively is trying to improve protections, he says. "It behooves China to clean this up if they want to integrate into the global economy," Mulholland says, adding that this is a top priority for the Chinese government.

The FBI also noted that Yang had booked travel to China on a commercial flight scheduled to leave on July 7. He was ordered held without bond. If convicted Yang faces up to 10 years in prison, a $250,000 fine, and three years of supervised release.

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