The US Federal Prosecutor's Office accuses former employee of global Headlands Technologies Richard Ho of stealing a top-secret algorithm that underpins high-frequency trading. This is the first time a technical conflict of this magnitude has moved from the plane of a civil dispute to a criminal court. Forbes Ukraine retells key details from the Bloomberg material
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U.S. federal prosecutors have charged former global Headlands Technologies trader Richard Ho, 36, with stealing the company’s top-secret algorithm — mathematical models that generated profitable algorithms for high-frequency trading. The case is a rare example of a corporate intellectual property dispute going beyond arbitration and setting a precedent for criminal court.
Discord Code
Quantum trading fund Headlands Technologies LLC (HT) invested over $1 billion in developing its source code. This code was not just a set of instructions, but the “crown of the empire” of the company, containing classified components known as “atoms” and “alphas.”
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The essence of these “atoms” and “alphas” is to form trading strategies on the stock market. “Alphas” are models that predict prices based on real-time data, while “atoms” are the smaller functions that together form these complex models.
Both components are heavily used in global trading, and Headlands says they have generated billions in profits for the company. For example, Alpha might learn from Atoms that precious metals futures that start with the letter P typically fall on Tuesdays at 2:30 p.m. and then rise at 2:32 p.m. In that case, the HT system would sell platinum and palladium at 2:29 p.m. and buy them back at 2:31 p.m.
It was this code that US federal prosecutors say was stolen by Richard Ho. In January 2025, he was charged with theft of trade secrets, although the Cambridge University graduate has pleaded not guilty. If convicted, he faces up to 10 years in prison, but a trial date has not yet been set.
Ho played a key role in Headlands' “China Initiative,” which involved expanding trading to markets in China and beyond by arranging technical connections with international exchanges and brokers.
According to the prosecution, Ho not only copied the code, but also secretly founded his own quantum fund, One R Squared, while working at Headlands.
According to Headlands, Ho began stealing “atoms” and “alphas” in huge quantities, directly copying the code and integrating it into his fund, disguising it with cosmetic changes and reformatting. He left the company in August 2021, and One R Squared began trading on Chinese markets in spring 2022.
Headlands Technologies' trading algorithm was not just a set of instructions, but, according to the company's press service, “the crown jewel of its empire.” It contained classified components known as “atoms” and “alphas” that shape trading strategies on exchanges. Pictured is former Headlands Technologies employee Richard Ho, who is accused of stealing this algorithm. Photo by Getty Images
A civil lawsuit escalates into a criminal one
The Headlands v. Ho case went beyond a typical corporate dispute as U.S. federal prosecutors, including the U.S. Attorney's Office for the Southern District of New York, which handles the largest white-collar crime cases, brought criminal charges against Richard Ho.
Previously, such intellectual property issues were resolved through civil lawsuits, which often ended up out of court or in arbitration. But the huge amount of potential profits associated with this case has caught the attention of prosecutors.
Tower Research Capital, a competitor to Headlands, plays a key role in this story. According to the prosecution, Ho secretly collaborated with Tower.
The criminal lawsuit follows a civil lawsuit filed in 2023, but stayed pending the conclusion of a more serious indictment. In that lawsuit, Headlands alleges that Tower invested $15 million in Ho's One R Squared fund in exchange for a commitment to develop algorithmic strategies that the plaintiff claims were based on Headlands' intellectual property.
This allegedly resulted in One R Squared operating as an internal trading division of Tower, causing Headlands tens of millions of dollars in losses every month.
However, Tower Research Capital is not a party to the criminal case and calls One R Squared a “third-party service provider.” The company also denies the existence of borrowed elements in its source code and cites its obligation to resolve disputes through arbitration as a member of the CME .
Ho's defense is adamant. His lawyer, David Meister, says the prosecution has “repackaged” Headlands' civil lawsuit into a criminal case. “My client, a talented computer scientist from Cambridge who has been writing trading algorithms for over 10 years, was targeted by Headlands simply because he decided to leave the company and start his own in New York,” says Ho's lawyer.
Ho's defense plans to argue in court that Headlands' “atoms” and “alphas” were not actually a trade secret and that their value was short-lived, comparing them to “an open can of cola” that quickly loses its freshness.
Richard Ho's case has some parallels with that of Goldman Sachs programmer Sergey Aleynikov. In 2015, Aleynikov was convicted of stealing code for high-frequency trading and sentenced to eight years in prison. In the photo – Aleynikov leaves a federal courtroom in New York, 2010. Photo Getty Images
Code that cannot be touched
The case is unique on Wall Street because intellectual property theft cases, especially in the context of high-frequency trading and quantum algorithms, rarely reach criminal court, Bloomberg writes. Such disputes are usually resolved in civil courts, rather than in criminal trials, which can have much more serious consequences for the accused.
Ernest Chan, a veteran quant trader and founder of QTS Capital Management, confirms to Bloomberg that the accusations against Ho of direct code theft are exceptional. “Usually, quants just take an idea,” he says. “You can’t stop people from using a concept that’s already in their head.”
Meanwhile, Alok Chakravarty, a former federal prosecutor and cybersecurity expert, emphasizes the “obvious value” of this type of code for profitability. He notes that both companies “had the potential to make billions.” The numerous civil lawsuits between the trading companies could prompt the government to set clearer limits on criminal liability for “quants,” Alok says.
Richard Ho's case has some parallels with that of Goldman Sachs programmer Sergey Aleynikov, who became one of the central figures in Michael Lewis's book Flash Boys. In 2015, Aleynikov was convicted of stealing high-frequency trading code and sentenced to eight years in prison. However, Aleynikov served only a year before an appeals court overturned the conviction. He was later convicted again on similar charges in a New York state court, but this time without any actual prison time.
The prosecution’s case in Ho’s case looks strong, but prosecutors will face challenges, says former federal prosecutor Carrie Axel. “It’s extremely difficult to prove a technically complex case,” she adds. “A jury could well agree that ‘atoms’ and ‘alphas’ are not trade secrets.”
