Ex-Two Sigma Quant Charged with $23.5M Model Manipulation Fraud

Jian Wu, a former quantitative researcher at Two Sigma Investments, has been federally charged with wire fraud, securities fraud, and money laundering for manipulating algorithmic trading models to inflate his compensation by over $23 million. Prosecutors allege Wu altered parameters in 14 trading algorithms between 2021 and 2023 to make them appear more profitable, causing approximately $165 million in losses to clients. Wu, who was fired in 2024 after the scheme was uncovered, reportedly used part of his inflated earnings to purchase a multimillion-dollar Manhattan apartment and is currently a fugitive. The case highlights ongoing regulatory scrutiny of individual quant traders within major hedge funds and follows a parallel civil suit by the SEC citing longstanding internal control weaknesses at Two Sigma. Authorities emphasize Wu's breach of employer trust by exploiting his technical expertise to deceive the firm, which has since repaid investors and paid substantial penalties related to model failures. The prosecution is being led by the U.S. Attorney's Office and involves collaboration with the FBI and SEC, with Wu facing up to 20 years in prison per charge.