Zero­Hedge News

• Citadel Set­tles Suit Alleg­ing For­mer Senior Trader Shared Its Algo­rith­mic “Secret Sauce“
  Citadel Set­tles Suit Alleg­ing For­mer Senior Trader Shared Its Algo­rith­mic “Secret Sauce“

  Citadel has reached a set­tle­ment with the British hedge fund it accused of try­ing to plun­der one of its senior traders in an effort to get to its algo­rith­mic “secret sauce”.

  GSA Cap­i­tal Part­ners LLC and Citadel announced the set­tle­ment late last week after Citadel accused the fund of obtain­ing “closely guarded” trad­ing strate­gies when it hired the employee in ques­tion, Vedat Cologlu, accord­ing to Bloomberg.

  GSA said of the set­tle­ment that the two firms “rec­og­nize and respect the impor­tance and value of the other’s rights over their con­fi­den­tial infor­ma­tion and intel­lec­tual property.”

  We first doc­u­mented that Citadel was suing British hedge fund GSA Cap­i­tal in Jan­u­ary of 2020, after GSA attempted to hire Cologlu, allegedly in hopes of access­ing the quant secrets at the core of Citadel’s “ABC” auto­mated trad­ing strategy.

  Recall, we wrote back in Novem­ber of 2020 that Citadel was seek­ing around $40 mil­lion over claims that GSA was able to obtain infor­ma­tion on the strat­egy via texts and WhatsApp.

  Citadel argued late last year that GSA “can’t unsee” and can’t for­get the infor­ma­tion that was taken from Citadel’s secret algo­rithm. Citadel is also mov­ing to try and block GSA from using their trad­ing model. GSA has argued that they found no “secret sauce” from a high-​level descrip­tion of the struc­ture of a trad­ing algorithm.

  David Craig, a lawyer for Citadel Secu­ri­ties, said in late 2020: “GSA’s most senior man­agers now know where and how Citadel makes hun­dreds of mil­lions of dol­lars in annual rev­enues. They can­not for­get that infor­ma­tion, or put it out of their minds.”

  He noted that only 15 of Citadel’s 3,000 employ­ees ever had access to the “strate­gic logic” of the strat­egy. One of those employ­ees was Cologlu, a 2007 Whar­ton grad and self-​described “stat arb trader”, who helped oper­ate and admin­is­ter the mod­els whose “returns were notably high given the low level of risk it took on.”

  Citadel has claimed its “ABC” quant strat­egy cost more than $100 mil­lion to develop. In its law­suit, Citadel alleged that the UK fund wanted Cologlu to hand over con­fi­den­tial infor­ma­tion about the strategy:

  GSA asked for sen­si­tive infor­ma­tion on his equity-​trading includ­ing his prof­its and the speed of the trades. And then Cologlu handed over a plan that Citadel argues was based on its own con­fi­den­tial model, includ­ing the way the algo­rithm made predictions.

  And there’s good rea­son for the infor­ma­tion to be cov­eted. Citadel Secu­ri­ties has been wildly prof­itable: the com­pany posted a record $6.7 bil­lion in rev­enue in 2020. This was almost dou­ble the pre­vi­ous high in 2018. The block­buster result came after some of its traders moved from Chicago and New York to set up shop in a Palm Beach hotel in late March 2020 as the pan­demic upended lives and mar­kets across the globe. The results of the privately-​held com­pany were released in pre­sen­ta­tion to investors as part of a $2.5 bil­lion loan Citadel Secu­ri­ties was seeking.

  The Citadel secu­ri­ties trad­ing arm started as a high-​frequency market-​maker in options before push­ing into equi­ties. Today, the firm dom­i­nates that realm and has had a very close rela­tion­ship with the likes of the mil­len­ni­als’ favorite trad­ing plat­form, Robin­hood. We doc­u­mented back in Sep­tem­ber 2020 that Citadel now con­trols 41% of all retail trading.

  GSA was spun out of Deutsche Bank AG in 2005 and man­ages around $7.5 bil­lion. Citadel’s legal fil­ing names GSA founder and major­ity owner Jonathan His­cox as a defen­dant, along­side other offi­cials includ­ing the chief tech­nol­ogy officer.

  Back in Jan­u­ary 2020, we noted the full details of Citadel’s lawsuit.

  Tyler Dur­den Sat, 06/​12/​2021 — 14:00
• China Urges US & Rus­sia To Reduce Their Nuclear Arse­nals
  China Urges US & Rus­sia To Reduce Their Nuclear Arse­nals

  Authored by Dave DeCamp via Anti​War​.com,

  Chi­nese For­eign Min­is­ter Wang Yi on Fri­day called on the US and Rus­sia to reduce their nuclear arse­nals dur­ing the UN-​backed Con­fer­ence on Dis­ar­ma­ment in Geneva.

  While Wash­ing­ton is con­stantly hyp­ing up China’s nuclear arse­nal, it is only a frac­tion of what the US and Rus­sia pos­sess. Esti­mates on the higher-​end put China’s nuclear stock­pile at 350 war­heads. Rus­sia has about 6,350 war­heads, while the US has 5,800.

  Despite the num­bers, the US com­plains that Bei­jing does not want to enter arms con­trol talks. But China has no moti­va­tion to do so unless the US and Rus­sia make an effort to reduce their arse­nals. Regard­less, the US con­tin­ues to blame the issue on China.

  “To date, China has rebuffed US efforts to ini­ti­ate bilat­eral talks on risk reduc­tion and strate­gic sta­bil­ity,” Robert Wood, the US ambas­sador for dis­ar­ma­ment, said at the conference.

  Besides hav­ing way more nuclear weapons than Bei­jing, the US is also encir­cling China with mil­i­tary hard­ware. The US has plans to deploy medium-​range mis­siles near China that were pre­vi­ously banned under the Intermediate-​Range Nuclear Forces Treaty, which the US with­drew from in 2019.

  Wang took a shot at the US for its plans to fur­ther mil­i­ta­rize Asia which he char­ac­ter­ized as under­min­ing regional stability.

  “China opposes the devel­op­ment and deploy­ment of regional and global mis­sile defense sys­tems by a cer­tain coun­try that under­mine strate­gic sta­bil­ity, and China opposes the deploy­ment of land-​based intermediate-​range bal­lis­tic mis­siles by the same coun­try in the neigh­bor­hood of other coun­tries,” he said.

  Tyler Dur­den Sat, 06/​12/​2021 — 13:30
• No Vax, No Phone — Pak­istan Province Blocks Sim Cards Of The Unvac­ci­nated
  No Vax, No Phone — Pak­istan Province Blocks Sim Cards Of The Unvac­ci­nated

  Pak­istan is expected to spend more than a bil­lion dol­lars in the next fis­cal year to import COVID-​19 vac­cines to inoc­u­late around 100 mil­lion peo­ple. The trou­ble is, anti-​vaccine groups have sprung up around the coun­try and have deterred some from tak­ing the vac­cine. In response, one local gov­ern­ment in Pak­istan has a new weapon in its war chest against vac­cine hes­i­tancy: dis­able the SIM cards of mobile phones of peo­ple who decline to get jabbed, accord­ing to RT News.

  Pun­jab Health Min­is­ter Yas­min Rashid decided on Thurs­day dur­ing a meet­ing with the Pun­jab provin­cial gov­ern­ment and mil­i­tary offi­cials that any­one who denied the COVID-​19 jab will have their SIM cards dis­abled at “a cer­tain time.”

  “We are doing all we can to com­pel peo­ple to get vac­ci­nated… The gov­ern­ment can­not allow indi­vid­u­als, who do not want to get vac­ci­nated, to risk lives of those who are already vac­ci­nated,” Rashid said. She added that a time­line from when a per­son denies the jab to SIM card denial would be hashed out once the new mea­sure received for­mal approval from the National Com­mand and Oper­a­tion Cen­ter, which super­vises Pakistan’s national response to COVID-​19.

  After the meet­ing, Punjab’s Pri­mary and Sec­ondary Health Depart­ment tweeted: “Mobile SIMS of peo­ple not get­ting vac­ci­nated may be blocked, it was decided in Cab­i­net meet­ing under the chair of Min­is­ter for Health Dr. Yas­min Rashid at Civil Sec­re­tariat. The gov­ern­ment will open walk-​in vac­ci­na­tion of over 18 years of age group.”

  There was no word on when the SIM card block­ing would begin.

  How­ever, provin­cial offi­cials announced the plan was mov­ing ahead:

  “Final deci­sion has been taken to block the mobile SIM cards of peo­ple not get­ting vac­ci­nated,” depart­ment spokesman Syed Ham­mad Raza told Pakistan’s Dawn newspaper.

  Crit­ics said Punjab’s new mea­sure is a dan­ger­ous move by the government.

  “This is a regres­sive step as it affects the right to free­dom of speech of cit­i­zens. What is required is to raise aware­ness about vac­ci­na­tions, and not coer­cion,” Pras­anth Sugathan, legal direc­tor at India’s Soft­ware Free­dom Law Cen­tre, told The National.

  “Dur­ing the pan­demic, mobile phones are impor­tant for peo­ple to con­nect with oth­ers and to receive infor­ma­tion,” Sugathan said.

  Besides SIM card bans, those who deny being vac­ci­nated might also be restricted from restau­rants, malls, and parks.

  This is absolutely absurd, and imag­ine if a liberal-​run metro area in the US resorted to this no jab, no phone mea­sure — peo­ple would lose their minds and likely rebel.

  Tyler Dur­den Sat, 06/​12/​2021 — 13:00