Wednesday, 28 September 2016
Last updated 11 hours ago
Nov 18 2010 | 4:08am ET
A former Société Générale trader admitted that he shared portions of that firm’s proprietary high-frequency trading computer program with hedge fund Tower Research Capital, a prospective employer.
The unexpected admission on the stand by Samarth Agrawal took even the judge by surprise. Agrawal has pleaded not guilty to charges of theft of trade secrets; prosecutors say he stole SocGen’s code as he was preparing to leave the firm for Tower.
“Frankly, I’m puzzled by the present situation,” U.S. District Judge Jed Rakoff said. “The defendant has admitted all essential elements of at least the first count of the indictment and probably the second count.”
“One is driven to the inference of what is really going on here is a sympathy defense,” Rakoff added. “And indeed one would feel hard-pressed not to feel sympathy for this defendant.”
Testifying in his own defense, Agrawal first said that he printed out the code to study it, on orders from his managers at SocGen.
“It was one of my responsibilities to know the code,” the 27-year-old said. “I printed it out so I could study at home.”
Agrawal also testified that his supervisor told him it would be “better that I work at home.” The trader said he was forced to work longer hours and on weekends after several departures from the high-frequency trading team, but that working on weekends had become a “red flag” at the firm, believed to be an allusion to the Jérôme Kerviel case.
Kerviel, a French trader at SocGen, lost the bank nearly €5 billion on unauthorized trades. Rakoff refused to allow discussion of the events that led to the encouragement to work from home.
But Agrawal then testified that he took the code so he could replicate it at Tower.
“I did it because I had to build the similar system at Tower,” Agrawal said. “I did it because I wanted the job.”
“It made certain things easier. I had to make some steps of trading, instead of making it from my mind,” he added.
Asked—by his own lawyer—if he knew that the code was proprietary to SocGen, and if he knew that taking it was wrong, Agrawal answered “yes” twice.
Rakoff said that closing arguments in the “curious case” would begin today, and said he expected it to go to the jury today or tomorrow. If convicted, Agrawal faces up to 10 years in prison.
Tower has denied that it hired Agrawal with the intent of getting SocGen’s proprietary software.