Starting at noon on November 2nd, a news link regarding a lawsuit filed against Xiao Zhang in a local federal court in the United States began to circulate within the industry. According to the news, Xiao Zhang is facing criminal charges in the federal district of Massachusetts in the United States. The indictment states that in 2021, Zhang used a virtual private network (VPN) to access the network of his employer's company in the United States, allowing him to bypass the company's controls. Zhang then copied the company's code, projects, and research, transferred these program copies, and established his own investment company in China. Multiple sources indicate that the defendant "Xiao Zhang" in the lawsuit is highly likely referring to Zhang Xiao, the founder and investment director of the multi-billion-dollar private equity fund Pansong Asset Management, for two reasons: first, the pronunciation of their names is the same; second, Zhang Xiao left Arrowstreet Capital's research department in the United States in August 2021 to start a business in China. Financial reporters from Cailian Press reached out to Zhang Xiao and relevant individuals at Pansong Asset Management for verification but did not receive a response. Based on the above indictment, Zhang is accused of stealing trade secrets. Industry insiders speculate that this lawsuit may be related to American authorities alleging that Xiao Zhang "stole strategies". It is well known that the core of quantitative investment lies in strategies, and the formulation and execution of strategies are crucial to the success or failure of investments and the core competitiveness of companies. Strategy formulation depends on algorithms and data, with algorithms being the trade secrets of each company. With the charge of stealing trade secrets, "Xiao Zhang" is being prosecuted in the United States. On October 31st, the Massachusetts Attorney General's Office in the United States released a news report stating that a Chinese citizen was sued for allegedly stealing his employer's trade secrets while working in Massachusetts in 2021. The employer is a global investment management company. The accused individual's name is Xiao Zhang, a 33-year-old from Shanghai, who is charged with stealing trade secrets. The indictment states that in 2021, Zhang used a VPN to access his employer's network, bypassing the company's controls. Zhang then copied the company's code, projects, and research, and sent these copies via a file-sharing application based in China, evading the company's controls once again. It is alleged that Zhang then attempted to establish his own investment company in China using the stolen goods. The Massachusetts Attorney General's Office stated that the charge of stealing trade secrets carries a maximum penalty of 10 years in prison, three years of supervised release, and a maximum fine of $250,000. The specific judgment will be made by a federal district court judge based on US sentencing guidelines and regulations governing sentencing in criminal cases. Who is "Xiao Zhang"? Industry insiders believe that Xiao Zhang is highly likely to be Zhang Xiao, the newly established founder and investment director of the multi-billion-dollar private equity fund Pansong Asset Management. The official website of Pansong Asset Management shows that the company focuses on equity assets and was established in June 2022, being registered with the China Securities and Fund Association in December of the same year. Zhang Xiao holds a Bachelor's degree in Finance from Shanghai University of Finance and Economics and a Master's degree in Finance and Economics from Columbia Business School. According to past interview information, Zhang Xiao was the head of research at Arrowstreet Capital before joining the firm, having worked in quantitative departments at major financial institutions such as Morgan Stanley and UBS. The website of the China Securities and Fund Association shows that Zhang Xiao worked in the research department at Arrowstreet Capital from July 2015 to August 2021. His departure from Arrowstreet Capital aligns with the timeline provided in the aforementioned indictment for stealing trade secrets. Pansong Asset Management has been operating since January 2023 and has successfully launched several products, with some achieving significant returns. The current website of Pansong Asset Management displays 19 products, covering dividend index growth, large-cap, mid-cap, and small-cap index growth, long/short hedging, neutral strategies, and stock index futures arbitrage products. When the small-cap style has been struggling this year and the performance of quantitative neutral strategies has encountered significant declines in February, April, and September, Pansong has consistently maintained a low drawdown, explosive performance, with the Pansong Micro Index Growth Enhancer 1 achieving a return of 23.38% year-to-date. The returns of the small-cap and micro-cap index growth-related products have exceeded or approached 20% for the year. With low fees and strong performance, Pansong Asset Management has attracted numerous investors through direct sales channels, leading to a continuous growth in their managed assets. As of March this year, they surpassed $5 billion in managed assets, surpassing $10 billion in July and becoming a billion-dollar private equity fund. However, since the beginning of this year, there has been curiosity within the industry about how Pansong Asset Management has been able to consistently achieve impressive performance. Some industry insiders have expressed concerns, noting that while the fundamentals have been positive this year and Pansong has benefitted from basic strategies with a high capacity and low turnover, there are some anomalies, such as market style changes where Pansong is able to keep up with the switching pace, which seems inconsistent with their trading frequency. An industry insider told Cailian Press that the indictment indicates that Xiao Zhang is accused of stealing trade secrets by replicating his employer's code, projects, and research through technical means, which can be understood as stealing the company's strategies. Strategies are the core of a quant company, and this is likely the reason for the American company holding Zhang accountable. As of now, Pansong Asset Management has not responded to reporters or made a public statement on this matter. This article is reprinted from "Cailian Press," edited by GMTEight: Liu Jiayin.