A high-frequency trading software developer was charged on Thursday by Joon Kim, the acting U.S. Attorney in Manhattan, with attempting to steal quantitative trading code from a secretive financial firm based in the Philadelphia area that specializes in making markets for options.
Dmitry Sazonov, 44, who worked for Susquehanna International Group for 13 years as a software engineer, was arrested in the lobby of Susquehanna’s New York offices on Wednesday by agents of the Federal Bureau of Investigation.
According to the criminal complaint, Sazonov tried to steal source code linked to an updated trading platform Susquehanna has been developing for years to generate exchange and market orders. Sazonov started his effort to steal the proprietary trading code in February, the complaint says, after learning his supervisor had resigned.
Federal prosecutors claim that Sazonov, fearing he would be fired, downloaded the source code to his company computer and deployed a computer program that may have used steganography to break up data and hide data within other files, including personal tax and immigration documents. Sazonov attached zip files containing the quant trading code to two saved emails addressed to a personal account, but he was fired and immediately escorted out of Susquehanna’s New York offices in February before he had a chance to send the emails, the complaint says.
The feds say Sazonov kept asking to get his personal computer files back from his corporate computer and showed up on Wednesday afternoon in the lobby of Susquehanna’s New York offices thinking he was going to have them returned. There, an FBI agent pretending to be a Susquehanna employee handed Sazonov a disk and he was arrested, federal prosecutors say.
Federal prosecutors and Susquehanna did not respond to calls and emails requesting comment on Thursday evening. Sazonov’s LinkedIn page shows he was educated in Russia and has been working at Susquehanna since 2004, developing “strong experience with trading application development.” The complaint filed by federal prosecutors says Sazonov has worked at the firm that fired him since 2004 and that the firm is headquartered in Pennsylvania with offices in New York. The feds also say the trading platform Sazonov worked on trades $300 million in options daily. Susquehanna is known on Wall Street for its options trading.
Last week federal prosecutors in Manhattan also charged Jim Zhang with stealing computer code related to algorithmic trading models at an unnamed New York-based financial firm.
Federal and state prosecutors in New York have shown an intense interest in going criminally after employees of quantitative trading firms who they believe have stolen trading code. But in recent years Manhattan District Attorney Cyrus Vance has taken the lead in the area after the controversial saga of Sergey Aleynikov. The former Goldman Sachs quantitative trading researcher was initially prosecuted by federal prosecutors starting in 2009 for allegedly stealing secrets. He was convicted by a federal jury but a federal appeals court overturned the decision. Aleynikov was later prosecuted again by District Attorney Vance, found guilty by a jury, acquitted by a judge, and then essentially found guilty again by an appeals court earlier this year.
