Xiao Zhang, co-founder of prominent Chinese quantitative hedge fund Pinestone Asset Management Co, has been indicted by a federal grand jury in Boston on charges related to the alleged theft of trade secrets, according to a report by Bloomberg.
The report cites sources familiar with the matter as revealing that Zhang, a 33-year-old Shanghai-based Chinese citizen, is accused of misappropriating proprietary information from a global investment firm where he previously worked.
The indictment, announced by the US Attorney’s Office in Massachusetts on 31 October, claims Zhang accessed his former employer’s network via a virtual private network (VPN) while in China in 2021, allegedly bypassing company security protocols. He is accused of copying confidential code, research, and projects with the intention of using the information to establish his own firm. While the statement did not reveal Zhang’s former employer, registration data from the Asset Management Association of China indicates Zhang worked in Arrowstreet Capital’s research department in Boston from July 2015 to August 2021.
Pinestone, which Zhang co-founded with Wu Que, has quickly risen to become one of the top-performing quant funds in China. Established in June 2022, Pinestone has grown its assets under management to over RMB10bn ($1.4bn). The fund focuses on low-frequency trading strategies and has achieved a 10.3% return in the first half of this year, making it the top-performing Chinese quant fund managing more than RMB10bn, according to data from Shenzhen PaiPaiWang Investment & Management Co.
The US does not have an extradition treaty with China, and Zhang remains in Shanghai, where he has retained legal counsel in both China and the US.
