There’s an update to an insider breach case previously noted on this site involving a former employee of Citadel LLC and Tradeworx Inc. An opinion out of the 7th Circuit Court of Appeals may offer some small measure of hope to defendants in CFAA cases when it comes to restitution for theft of proprietary information and costs of investigation.
From U.S. v. Pu:
WILLIAMS, Circuit Judge. Yihao Pu worked for two companies, “Company A” and Citadel, which are financial institutions that traded stocks and other assets on behalf of clients. While working at each company, Pu copied computer files from his employer’s system to personal storage devices. The files were part of each company’s proprietary software that allowed them to execute strategic trades at high speeds. The files were company trade secrets, and Pu’s copying of the files was a significant data breach.
Normally, crimes involving the theft of computer data trade secrets lead to the sale of the data to, or the thief being hired by, a company that will use the data. But here, Pu used the data to conduct computerized stock market trades for himself and lost approximately $40,000.
Pu was indicted and pleaded guilty to one count of unlawful possession of a trade secret belonging to Company A, and one count of unlawful transmission of a trade secret belonging to Citadel. The district court sentenced him to 36 months in prison and ordered him to pay over $750,000 in restitution. Pu appeals, arguing that the district court’s factual findings did not support its conclusion that Pu intended to cause a loss to the companies of approximately $12 million. We agree. Pu also challenges the district court’s failure to require the government to provide a complete accounting of the loss caused by his offense before it determined the amount of restitution owed. We also agree that the district court erred by awarding restitution without evidence that reflected a complete accounting of the victims’ investigation costs.
Read the full opinion here (pdf). The court vacated Pu’s sentence and the restitution order and remanded the case for resentencing.
h/t, Orin Kerr