Photographer: Jason Alden/Bloomberg

Hedge Fund Loses Bid to Block Quant Fraudster's Deportation

Updated on
  • Ke Xu convicted of stealing trading algorithms from Trenchant
  • Firm wanted Xu in U.K. until August to protect trading secrets

A London hedge-fund analyst convicted of stealing millions of pounds of secret algorithmic trading strategies can’t be stopped from being deported by his former employer, Trenchant Ltd., a judge ruled.

In what Judge Michael Supperstone called an “unusual case,” he dismissed the firm’s application for judicial review of the U.K. Home Office’s decision to deport Ke Xu, a Chinese national. The U.K. made "a deportation order against a foreign criminal on the grounds his deportation is conducive to the public good," while Xu wishes to return to China, the judge said.

Trenchant argued that Xu’s departure would open the firm to “serious harm” when he returns home and is able to sell their trading secrets. Trenchant’s algorithmic investment strategies are used by its associated companies to make financial-market investments.

Xu, a University of Cambridge math graduate who had worked at Goldman Sachs Group Inc., was employed at Trenchant between 2012 and 2014. He undertook a "sustained and extensive attack" on the fund’s computer systems and reverse-engineered code for 55 investment strategies worth 31 million pounds ($42 million), Trenchant’s lawyers said.

He went to Hong Kong in August 2014 to meet headhunters with the stolen data. Xu was arrested there and extradited to the U.K. He pleaded guilty to a series of charges and was sentenced to four years in jail in July 2015.

Xu "simply wants to return home," James O’Hara, his lawyer said. Xu is currently detained at a deportation center. Foreign nationals convicted of a crime are usually deported before finishing their jail term.

Massive delays

Trenchant doesn’t want Xu to leave the country until August 2018, when his conviction officially ends. Xu, who was jailed for another 18 months in January for refusing to return the codes, continues to deny he made copies of any of the strategies, although it is likely he memorized them, lawyers said.

"In my case it has been massive delay after massive delay. Trenchant has put huge resources into keeping me in custody," Xu said in a statement. Trenchant, “armed with their battalion of international lawyers, not only have more access to justice, but are extremely adept in achieving delay for their own selfish advantage."

The shelf life of the stolen codes are thought to be around five years, the fund’s lawyers said. Neither Trenchant’s lawyers nor the Home Office responded to requests for comment.

Trenchant has applied to another London court to force Xu to hand over whatever technology he still has, a lawyer for the firm said in court Wednesday. That may give it a way to keep him in the U.K. until it has been fully resolved.

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