On September 11, 2025, the U.S. Attorney for the Southern District of New York (SDNY) and the Securities and Exchange Commission (SEC) brought parallel criminal and civil charges, respectively, against Jian Wu for orchestrating a scheme to deceive his former employer, Two Sigma Investments, LP and its affiliate, Two Sigma Advisers, LP (together "Two Sigma"), to reap millions of dollars in ill-gotten compensation by secretly manipulating computer-based algorithmic investment models that Two Sigma used to make investment decisions for clients, including decisions to buy and sell securities.1 According to the SDNY, Wu is currently a fugitive.
The SEC's complaint alleges that, between November 2021 and August 2023, Wu secretly manipulated at least 14 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 SEC's complaint, Wu obtained millions of dollars of ill-gotten gains in incentive compensation as a result of his fraud. The SEC charged 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.
The indictment further alleged that, as a result of his fraudulent conduct, Wu's firm rewarded him with an inflated year-end compensation of approximately $23 million. Wu then used a portion of his compensation to purchase a multimillion-dollar apartment in Manhattan. When the Two Sigma uncovered Wu's scheme, Wu made additional unauthorized changes to the models' parameters in an attempt to conceal his prior tampering. Wu was fired in 2024. The indictment charged Wu with one count each of wire fraud, securities fraud, and money laundering, each of which carries a maximum sentence of 20 years in prison.
In yet another parallel action and just two business days later, on September 15, 2025, the SEC filed settled charges against Wanu Water, Inc. ("Wanu") and its founder Todd O'Gara.2 The SEC alleges that, from January 2019 through August 2024, O'Gara and Wanu raised at least $10.3 million from more than 50 investors based on false and misleading statements regarding the size of Wanu's deals with a prominent retailer — that at least two private equity firms had promised large investments, O'Gara's personal wealth and credentials, and how Wanu would use investors' proceeds. O'Gara was previously charged criminally by complaint with one count of wire fraud by the U.S. Attorney's Office for the District of New Jersey.3 O'Gara has agreed to plead guilty at a hearing in his criminal case scheduled for October 2025.
The Wu parallel actions provide strong indication that coordination between the SEC and its federal criminal counterparts at SDNY, the Department of Justice, and other U.S. Attorney's Offices around the country has not gone away. In fact, the parallel actions filed against Wu reveal alignment with historical practices of active and strategic information sharing and planning to investigate and file actions on the same day. Further, the complex fact pattern here indicates that the SEC will not be deterred from working closely with their federal criminal counterparts to investigate, file, and — if needed — litigate parallel cases, despite the challenges such fact patterns may present. The main takeaway from the O'Gara parallel actions is that the Division of Enforcement under Chair Atkins may continue to file SEC actions after the related criminal cases have been filed, which some claim is akin to "piling on."
Footnotes
1 https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26398; https://www.justice.gov/usao-sdny/pr/quant-investment-management-firm-charged-securities-and-wire-fraud.
2 https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26401.
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