Following an initial action in January 2025 against registered investment advisers, Two Sigma Investments, LP and its affiliate, Two Sigma Advisers, LP (together “Two Sigma”), for violating their fiduciary duties for failing to reasonably address known vulnerabilities in their investment models, the SEC charged Jian Wu with orchestrating a scheme to deceive Two Sigma and reaping 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. According to the SEC complaint, 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 enforcement actions were initiated by examinations by the SEC's Private Fund Unit. The action against Wu will be litigated, and the U.S. Attorney’s Office for the Southern District of New York announced parallel criminal charges against Wu.