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One of the biggest financial frauds of this century has just been perpetrated by two young people that used to work for them, the questioning related to "how di

One of the biggest financial frauds of this century has just been perpetrated by two young people that used to work for them, the questioning related to "how did Jane Street hire these people" is perfectly logical.

hahaxdxd123 4y ago
Well the interview process is more or less "are you good at probability puzzles and games somewhat related to trading." A plausible story to me is that they were good at whatever they screen for in the interview and then at Jane Street they made a bunch of money. Then they attributed too much of that to themselves and not enough to whatever institutional processes and risk frameworks they benefited from. They bring themselves but not those processes to their own trading firm, and then boom!
- MrMan 4y ago
  I worked on quant buy side for a long time and you dont just automatically come out of these places knowing one secret to making money trading. equally smart on paper people might be working on message passing, risk management, data analysis, special projects, also trading, simulator, database, and might spend 5 years in-house and not come away from the experience with knowledge which by itself represented major alpha. for me just knowing how to setup a quant trading firm, how to choose prime brokers, how to find and select vendors, leased lines, how to setup paper work, cap intro relationships, exchange memberships, FIX certs, are of equal value as alpha tricks, and really I dont even see a lot of evidence that the Almeda / FTX people were particularly well-seasoned in any respect.
deleted 4y ago
[deleted]
tedunangst 4y ago
Did they work in the risk management back office at JS?
- paganel 4y ago
  The Societe Generale guy that managed to lose 5 billion euros for the bank through "breach of trust and forgery" (to quote wikipedia [1]) didn't work in the risk management department. I don't think that was any consolation for the bank's stakeholders. [1] https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel
  - tedunangst 4y ago
    Actually he had worked in compliance, and then they moved him to front office. Extremely dangerous. Not recommended. But the point is you can't infer anything about Jane Street risk controls from people who didn't have that role.
    - paganel 4y ago
      > Jane Street risk controls from people who didn't have that role. I'm talking about the Jane Street risk control people not being able to filter out two of the biggest fraudsters of this century. Yes, I know that, technically, the Jane Street risk control people most probably only focus on the risky stuff that might bring their house down, and, as such, they most probably wash their hands when it comes to the deeds of their former employees, but I was under the impression that when those sort of shops hire someone there's also a general screening for "is this a guy/lady that is going to swindle billions of dollars in the near future"? And, to be honest, I guess that's what the cachet of people like SBF was, especially in a very deregulated and wild market like crypto is. More exactly "normal" people would have thought along the lines of: "this guy has worked for Jane Street -> I've read Jane Street are cool, honest people, so they must have done some vetting of their employees -> SBF most probably won't run with my money". More generally speaking, as you most probably well know, the whole house of finance is built on trust and trust alone. That goes for crypto, that goes for traders like JS, that goes for boring money market funds, that goes for the FED itself (probably with trust decreasing from Fed -> to MMFs -> to traders -> to crypto). When such swindlers like SBF and Caroline Ellison both happen to have worked at any one entity that's part of that chain of trust that I mentioned, then said entity can't just wash its hand saying "well, we checked out on them, they were fine when they used to work for us", it doesn't work like that. People will start asking themselves: "Are there other swindlers now working for JS that JS has failed to catch during its vetting process? If yes, do they risk bringing the whole JS house down?".
biggoodwolf 4y ago
The founder of EA got SBF in. That's another can of worms but that guy apparently changed his last name from Crouch to McAuskil or whatever...
- telotortium 4y ago
  How would Will MacAskill have enough sway to get SBF in Jane Street? Also, why would that matter? I have absolutely no reason to believe SBF couldn't pass their interviews.

hahaxdxd123 4y ago

Well the interview process is more or less "are you good at probability puzzles and games somewhat related to trading." A plausible story to me is that they were good at whatever they screen for in the interview and then at Jane Street they made a bunch of money. Then they attributed too much of that to themselves and not enough to whatever institutional processes and risk frameworks they benefited from. They bring themselves but not those processes to their own trading firm, and then boom!

MrMan 4y ago
I worked on quant buy side for a long time and you dont just automatically come out of these places knowing one secret to making money trading. equally smart on paper people might be working on message passing, risk management, data analysis, special projects, also trading, simulator, database, and might spend 5 years in-house and not come away from the experience with knowledge which by itself represented major alpha. for me just knowing how to setup a quant trading firm, how to choose prime brokers, how to find and select vendors, leased lines, how to setup paper work, cap intro relationships, exchange memberships, FIX certs, are of equal value as alpha tricks, and really I dont even see a lot of evidence that the Almeda / FTX people were particularly well-seasoned in any respect.

deleted 4y ago

[deleted]

tedunangst 4y ago

Did they work in the risk management back office at JS?

paganel 4y ago
The Societe Generale guy that managed to lose 5 billion euros for the bank through "breach of trust and forgery" (to quote wikipedia [1]) didn't work in the risk management department. I don't think that was any consolation for the bank's stakeholders. [1] https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel
- tedunangst 4y ago
  Actually he had worked in compliance, and then they moved him to front office. Extremely dangerous. Not recommended. But the point is you can't infer anything about Jane Street risk controls from people who didn't have that role.
  - paganel 4y ago
    > Jane Street risk controls from people who didn't have that role. I'm talking about the Jane Street risk control people not being able to filter out two of the biggest fraudsters of this century. Yes, I know that, technically, the Jane Street risk control people most probably only focus on the risky stuff that might bring their house down, and, as such, they most probably wash their hands when it comes to the deeds of their former employees, but I was under the impression that when those sort of shops hire someone there's also a general screening for "is this a guy/lady that is going to swindle billions of dollars in the near future"? And, to be honest, I guess that's what the cachet of people like SBF was, especially in a very deregulated and wild market like crypto is. More exactly "normal" people would have thought along the lines of: "this guy has worked for Jane Street -> I've read Jane Street are cool, honest people, so they must have done some vetting of their employees -> SBF most probably won't run with my money". More generally speaking, as you most probably well know, the whole house of finance is built on trust and trust alone. That goes for crypto, that goes for traders like JS, that goes for boring money market funds, that goes for the FED itself (probably with trust decreasing from Fed -> to MMFs -> to traders -> to crypto). When such swindlers like SBF and Caroline Ellison both happen to have worked at any one entity that's part of that chain of trust that I mentioned, then said entity can't just wash its hand saying "well, we checked out on them, they were fine when they used to work for us", it doesn't work like that. People will start asking themselves: "Are there other swindlers now working for JS that JS has failed to catch during its vetting process? If yes, do they risk bringing the whole JS house down?".

biggoodwolf 4y ago

The founder of EA got SBF in. That's another can of worms but that guy apparently changed his last name from Crouch to McAuskil or whatever...

telotortium 4y ago
How would Will MacAskill have enough sway to get SBF in Jane Street? Also, why would that matter? I have absolutely no reason to believe SBF couldn't pass their interviews.