[BreachExchange] Chicago trader gets 1 year in prison for stealing ex-employer's computer code

[Audrey McNeil]

http://www.chicagotribune.com/business/ct-chicago-trader-
sentenced-0606-biz-20170605-story.html

A former longtime worker at WH Trading has been sentenced to a year and a
day in federal prison for stealing secrets from the Chicago-based firm.

Over five months in late 2013 and early 2014, David J. Newman stole all of
the securities trading firm's computer code and trading software,
downloading more than 400,000 electronic files to multiple thumb drives.

Newman, 34, had worked for WH Trading since 2004 and resigned from the
business in March 2014 after starting his own firm, NTF, through which he
planned to use the stolen trade secrets to compete with WH Trading.

Newman, who pleaded guilty last year in federal court in Chicago to one
count of theft of trade secrets, was also fined $100,000 at sentencing
Thursday and was ordered to not use or disclose the secrets, which took WH
Trading mathematicians, statisticians and other employees more than 15
years and $20 million to develop.

The codes are used for, among other things, pricing futures and options
contracts, analyzing the risk of trades, interpreting exchange market data
and executing trades on various exchanges, including ones in Chicago, New
York, London, Frankfurt and Singapore.

Thomas More Leinenweber, Newman's lawyer, said they respect the judge's
decision but are "disappointed that the judge felt that a prison sentence
was necessary to deter others from potentially stealing trade secrets."

"Our client is effectively banned from the trading industry and lost
millions of dollars as a result of his actions already," said Leinenweber,
of Leinenweber Baroni & Daffada in Chicago. "That, with the stigma of a
federal criminal conviction, we felt was enough punishment for him
specifically and to deter others in similar situations."
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