UES Finance Executive, Now a Fugitive, Indicted for Massive Hedge Fund Fraud

Jian Wu was a brilliant but apparently flawed Ivy league computer and mathematics genius, originally from China, who lived in the Kent Building, one of the most expensive addresses on the Upper East Side. Now, accused of high crimes in the high stakes world of quantitative finance, he is in the wind and the feds want to seize his luxury condo and bring him to justice

Wu’s story, which had already emerged as one of the strangest to emerge from the city’s financial community in recent years, reached a new turning point on Thursday, September 11, when the 34 year-old former Senior Vice President at the Soho-based hedge fund Two Sigma, was hit with simultaneous criminal and civil fraud charges, from the Southern District of New York (SDNY) and the Securities Exchange Commission (SEC), respectively.

In 2018, Wu began employment at Two Sigma, which was co-founded in 2001 by David Siegel and John Overdeck and has its headquarters at 100 Sixth Ave in SoHo. A November 2023 New York Times article, “Warring Billionaires, a Rogue Employee, a Divorce: One Hedge Fund’s Tale of Woe.” described what was then known about the Wu case, and the unrelated irreconcilable feud between Siegel and Overdeck.

Though the charging documents against Wu differ in style, they cover essentially the same alleged crimes, which are much weirder than the language of prosecutorial press releases allow.

“Quant At Investment Management Firm Charged With Securities And Wire Fraud,” read the SDNY announcement, while the SEC went with “Quantitative Model Developer Charged with Defrauding Registered Investment Advisers.”

“Jian Wu allegedly abused his position to manipulate data models, which resulted in an undeserved multimillion-dollar award for his unlawful actions,” said FBI Assistant Director in Charge Christopher G. Raia about the SDNY case. “In doing so, Wu betrayed the trust of his employer who relied on his expertise. The FBI continues its steadfast promise to hold accountable those who seek to exploit their positions to generate illicit compensation.”

At its 2022 peak, Wu’s “illicit compensation” was $23.5 million, which seemed like a reasonable deal, as Wu’s modeling acumen had earned Two Sigma $470 million. Wu’s data models, however, were not as they seemed, prosecutors now claim.

In the SDNY case, Wu faces one count each of wire fraud, securities fraud, and money laundering, each of which carry maximum sentences of 20 years in prison. Wu is also facing forfeiture of his multi-million dollar condo, Unit 9A, in The Kent building, at 200 East 95th Street, at Third Avenue.

According to StreetEasy, Wu’s 5-bedroom, 4.5 bath apartment, which he appears to have absconded from sometime in 2024, was rented at a monthly rent of $28,000 that July. That price was down from its initial monthly asking price of $36,500

In the SEC’s case, Wu, an Ivy league educated computer finance originally from China, faces financial penalties and banishment from the securities industry.

What’s a “Quant”?

But what’s a “quant”? In lay terms, it’s a computer and math genius who works to develop automated high speed trading models for an investment firm, such as Two Sigma. This type of trading is based on immense amounts of live data—like that gathered from a Bloomberg Terminal—processed at speeds vastly beyond human capability. When certain proprietary conditions are met, automated, trades are made.

As for the models Wu is accused of manipulating, according to Carnegie Mellon University, they “comprise mathematical formulas by way of stochastic calculus, computer algorithms, machine learning modules, artificial intelligence, or combinations thereof.”

Founded in the 1940s by the Japanese mathematician, Kiyosi Itô (1915-2008), stochastic calculus uses advanced math to study probability. From 1969 to 1975, Itô taught at Cornell University, where in the mid-2010s, Jian Wu entered the School of Operations Research and Information Engineering.

Who is Jian Wu?

He showed promise almost from the start. Published in August 2017, Wu’s Cornell PhD dissertation published in Aug. 2017 was titled “Knowledge Gradient Methods for Bayesian Optimization.” This and other of Wu’s brilliant academic papers have been frequently cited by scholars.

Wu’s dissertation also offers what little is publicly known about him: “Born in Hefei, Anhui province in China, a beautiful city in the middle of China. Before his college, he spent most of his time at his hometown. From age 16, he began his wonderful college life at Tsinghua, where he received a B.Eng in Automation.”

Wu’s dissertation was dedicated to his wife, Linran Wang, a food scientist and fellow Chinese graduate student at Cornell: “Her love, trust, and support makes this work possible!” In her own 2020 PhD dissertation, “High Pressure Processing of High Contration Milk Protein Systems,” Wang noted, ”My deepest gratitude further goes to my husband, Dr. Jian Wu, and my daughter Sofia, for their love and support. This work will not be possible without them.”

The Fall of the House of Wu

Wu’s downfall appears to have caused by his own recklessness, when in January 2023 an anonymous poster on Xiaohongshu, a Chinese social media site, boasted about the money he was making as a quant. Included was a bar chart: $385,000 in 2018, jumping to $4.2 million in 2020, and skyrocketing to $23.5 million in 2022.

This last figure was so eye-popping, the post went viral, with quantitive finance insiders figuring it came from somebody at Two Sigma—which suspended Wu in August 2023.

Two Sigma subsequently admitted that Wu’s manipulations of trading algorithm parameters had made the $450 million in unintended gains—including funds that its own employees invest in—and losses of $170 million for other clients. The latter investors were subsequently made whole, and Two Sigma agreed to pay the SEC $90 million in penalties.

In October 2023, the Two Sigma trading scandal became public, first in Bloomberg, in which an unnamed “employee” was fingered, then the Wall Street Journal, which, citing company sources, named Wu.

With his high flying career more and more now in jeopardy, Wu hired white-collar-crime law firm Clark, Smith, Villazor LLP, which that December filed suit against Two Sigma for defamation.

“Petitioner [Wu] is an extraordinarily talented individual who performed for Two Sigma at an exceptionally high level,” begins one section of the filing.

“He was compensated accordingly. . . . Two Sigma’s defamatory statements have significantly damaged Petitioner’s professional reputation, potentially rendering him unemployable in the hedge fund industry.”

With this lawsuit disposed in 2024, Wu went from unemployable to unfindable.

As for his potential whereabouts, and what’s next for the fugitive, queries to Clark, Smith, Villazor and the SDNY went unanswered. The SEC politely declined to comment.