$60 Billion Top Hedge Fund Two Sigma ex-Quantitative Researcher & Fugitive Jian Wu Charged in United States for Defrauding Employer Two Sigma by Manipulating Investment Models from 2021 to 2023 Causing $165 Million in Harm to Clients Leading to Salary of $23.5 Million in 2022
17th September | Hong Kong
Top hedge fund Two Sigma Investments ($60 billion AUM) ex-quantitative researcher & fugitive Jian Wu has been charged in United States for defrauding employer Two Sigma by manipulating investment models from 2021 to 2023, causing $165 million in harm to clients leading to Wu Jian salary of $23.5 million in 2022. United States SEC (11/9/25): “On September 11, 2025, the Securities and Exchange Commission charged New York resident Jian Wu with orchestrating a scheme to deceive his former employer, Two Sigma Investments, LP and its affiliate, Two Sigma Advisers, LP (together “Two Sigma”), and reap millions of dollars in ill-gotten compensation by manipulating computer-based algorithmic investment models that Two Sigma used to make investment decisions for clients, including decisions to buy and sell securities. The SEC’s complaint alleges that between November 2021 and August 2023, Wu secretly manipulated at least fourteen investment models that he created or helped create, which Two Sigma used to predict the future performance of securities, and which Wu understood Two Sigma used to make investment decisions for clients. According to the SEC’s complaint, Wu misrepresented to Two Sigma that these models were generating unique forecasts when, in fact, Wu made unauthorized and undisclosed changes to those models that caused them to effectively replicate the forecasts of other Two Sigma models. Wu’s unauthorized changes allegedly caused Two Sigma to buy and sell securities for its clients in amounts, concentrations, and frequencies that differed from Two Sigma’s intended strategies, and caused at least $165 million in harm to certain clients, which Two Sigma subsequently repaid. According to the complaint, Wu obtained millions of dollars of ill-gotten gains in incentive compensation as a result of his fraud. The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Wu with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks injunctive relief, disgorgement and prejudgment interest, a civil penalty, and an order barring Wu from acting as or being associated with an investment adviser. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Wu on September 11, 2025. In 2025 January, the United States Securities and Exchange Commission (SEC) fined hedge fund Two Sigma $90 million for failure in fiduciary duties to address identified vulnerabilities in investment models for 4 years until 2023 but flagged in 2019, and requiring departing employees to acknowledge not to have filed complaint to government agencies violating the whistleblower protection. Two Sigma had repaid $165 million to impacted funds & accounts. In 2023 October, Two Sigma Investments placed an employee on leave for possible misconduct for wrongful actions resulting in gains to some portfolio but losses to other clients’ portfolio. The employee is a researcher at Two Sigma Investments. In June 2023, Two Sigma Investments co-founders & co-Chairmans John Overdeck & David Siegel in a regulatory filing, cited disagreements on company leadership, structure & succession plan in the United States SEC (Securities and Exchange Commission) regulatory filing on material risks due to disagreements. Both co-founders John Overdeck & David Siegel are the firms’ management committee. Two Sigma Investments is founded in 2001 by David Siegel, John Overdeck and Mark Pickard in 2001. View United States SEC filing
“ $60 Billion Top Hedge Fund Two Sigma ex-Quantitative Researcher & Fugitive Jian Wu Charged in United States for Defrauding Employer Two Sigma by Manipulating Investment Models from 2021 to 2023 Causing $165 Million in Harm to Clients Leading to Salary of $23.5 Million in 2022 “
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United States SEC Fines Hedge Fund Two Sigma $90 Million for Failure in Fiduciary Duties to Address Identified Vulnerabilities in Investment Models for 4 Years Until 2023 But Flagged in 2019 & Requiring Departing Employees to Acknowledge Not to Have Filed Complaint to Government Agencies Violating Whistleblower Protection, Two Sigma Repaid $165 Million to Impacted Funds & Accounts
19th January 2025 – The United States Securities and Exchange Commission (SEC) has fined hedge fund Two Sigma $90 million for failure in fiduciary duties to address identified vulnerabilities in investment models for 4 years until 2023 but flagged in 2019, and requiring departing employees to acknowledge not to have filed complaint to government agencies violating the whistleblower protection. Two Sigma had repaid $165 million to impacted funds & accounts. United States SEC (16/1/25): “The Securities and Exchange Commission today announced settled charges against New York-based investment advisers Two Sigma Investments LP and Two Sigma Advisers LP (collectively, Two Sigma) for breaching their fiduciary duties by failing to reasonably address known vulnerabilities in their investment models and for related compliance and supervisory failures, as well as for separately violating the Commission’s whistleblower protection rule. Two Sigma voluntarily repaid impacted funds and accounts $165 million during the SEC’s investigation and agreed to pay $90 million in civil penalties to settle the SEC’s charges. According to the SEC’s order, in or before March 2019, Two Sigma employees identified and recognized vulnerabilities in certain Two Sigma investment models that could negatively impact clients’ investment returns, but Two Sigma waited until August 2023 to address the issues. Despite recognizing these vulnerabilities, Two Sigma failed to adopt and implement written policies and procedures to address them and failed to supervise one of its employees who made unauthorized changes to more than a dozen models, which resulted in Two Sigma making investment decisions that it otherwise would not have made on behalf of its clients. In addition, the SEC’s order separately finds that Two Sigma violated the Commission’s whistleblower protection rule by requiring departing individuals, in separation agreements, to state as fact that they had not filed a complaint with any governmental agency. This requirement, in effect, could identify whistleblowers and prohibit whistleblowers from receiving post-separation payments and benefits, both of which are actions to impede departing individuals from communicating directly with Commission staff about possible securities law violations, in violation of the whistleblower protection rule. The SEC’s order finds that Two Sigma Investments and Two Sigma Advisers willfully violated the antifraud provisions of the Investment Advisers Act of 1940 and the Advisers Act’s compliance rule, as well as Rule 21F-17(a) under the Securities Exchange Act of 1934, which prohibits impeding an individual from communicating with SEC staff about a possible securities law violation. Without admitting or denying the SEC’s findings, Two Sigma Investments and Two Sigma Advisers agreed to a cease-and-desist order imposing a censure and a penalty of $45 million each, totaling $90 million.”
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