Bloomberg News

Ex-CME Software Engineer Indicted for Theft of Trade Secrets

September 28, 2011

(Updates with defense lawyer’s comment in fifth paragraph.)

Sept. 28 (Bloomberg) -- A former senior software engineer for CME Group Inc. was charged with allegedly stealing source code from the Chicago company while at the same time pursuing plans to improve an electronic-trading exchange in China.

Chunlai Yang, who was arrested in July, was charged with two counts of theft of trade secrets in an indictment by a federal grand jury returned today, the U.S. Justice Department said. Yang 48, is free on a $500,000 bond, the U.S. said. No arraignment date has been set.

The U.S. claims Yang downloaded more than 1,000 computer files containing CME computer source code from December 8, 2010, to June 30, 2011, related to the company’s Globex electronic trading platform. The U.S. alleged Yang transferred the files to his home computer via a flash drive and negotiated to provide source code to the Zhangjiagang, China, chemical electronic trading exchange.

“CME Group brought this matter to the attention of federal authorities and fully cooperated with the investigation,” Patrick J. Fitzgerald, U.S. Attorney in Chicago, said in a statement. “This case is an excellent example of how law enforcement and corporations can work together to protect trade secrets.”

Two Partners

Yang will plead not guilty, his attorney, Edward Genson, said in a telephone interview today.

“He was not involved in downloading any documents other than for work use,” Genson said.

The U.S. claims that Yang was involved in developing with two partners a business called Gateway, which would increase the trading volume at the Zhangjiagang exchange.

“Defendant Yang expected that Gateway would provide the Zhangjiagang Exchange with technology to allow for high trading volume, high trading speeds, and multiple trading functions,” according to the indictment. “Yang was to become Gateway’s president.”

These claims are “specious,” Genson said. “There was a business but it involved real estate.” The source codes at CME were “incompatible for use in China,” he said.

Each count of theft of trade secrets carries a maximum penalty of 10 years in prison and a $250,000 fine, the U.S. said.

The case is U.S. v. Yang, 11-CR-458, U.S. District Court, Northern District of Illinois (Chicago).

--Editors: Mary Romano, Peter Blumberg

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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