A former senior software engineer for CME Group, a Chicago-based derivatives trading firm, has pleaded guilty to theft of trade secrets for stealing tens of millions of dollars' worth of computer source code and other information while pursuing plans to improve an electronic trading exchange in China, the U.S. Department of Justice announced.
Chunlai Yang downloaded more than 10,000 files containing CME computer source code that made up a substantial part of the operating systems for the Globex electronic trading platform, the DOJ said in a press release. The DOJ has estimated that the potential loss to the company was between US$50 million and $100 million, while Yang has pegged the loss at less than $55.7 million.
Yang, 49, of Libertyville, Illinois, worked for CME Group for 11 years. He pleaded guilty Wednesday in U.S. District Court for the Northern District of Illinois to two counts of theft of trade secrets. He faces a maximum penalty of 10 years in prison and a $250,000 fine on each count, while a written plea agreement advises 70 to 87 months in prison.
Yang also agreed to forfeit computers and related equipment that were seized from him when he was arrested.
Yang's responsibilities at CME included writing computer code, and he had access to the software programs that supported the company's Globex electronic trading platform, the DOJ said. The source code and algorithms that made up the supporting programs were proprietary and confidential business property of CME.
Between late 2010 and mid-2011, Yang downloaded more than 10,000 computer files containing CME computer source code from CME's secure internal computer system to his work computer, the DOJ said. He then transferred many of these files from his work computer to his personal USB flash drives, and then transferred many of these files from his flash drives to his personal computers and hard drives at his home.
Yang also downloaded thousands of other CME files, the DOJ said. He printed numerous CME internal manuals and guidelines describing how many of the computer files in Globex interact with each other.
Yang, along with his guilty plea, said he and two unnamed business partners developed plans to form a business referred to as the Tongmei (Gateway to America) Futures Exchange Software Technology Company. The goal of the company was to increase the trading volume at the Zhangjiagang, China, chemical electronic trading exchange, the DOJ said.
Yang negotiated with the Zhangjiagang Free Trade Board to improve the trading platform for the Zhangjiagang Exchange, so that the exchange could become a high-volume trading platform for technology companies, the DOJ said.
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