Trader arrested over alleged theft of trading firm’s trade secrets

What happened

Cheuk Fung Richard Ho was arrested in Los Angeles on 8 January 2025, accused of stealing trade secrets from his former employer, a global quantitative trading firm, the US Department of Justice said.

Ho, 36, of Los Angeles, was charged with one count covering theft and attempted theft of trade secrets in an indictment made public that day. The allegations have not been proved, and he is presumed innocent unless found guilty.

According to the department’s announcement, Ho worked as a research developer and quantitative trader at the business from about July 2019 until August 2021. The employer was not named in the release.

Prosecutors allege that he secretly established his own quantitative trading company in spring 2021, while still employed by the original firm. His new business partnered with one of his employer’s competitors, according to the indictment.

Ho allegedly used the extensive access granted through his job to take confidential material for the development of his new company’s software. The material included code components known within his employer’s system as “Atoms” and predictive formulas called “Alphas”.

The indictment alleges that using these trade secrets allowed Ho to get the new business operating quickly and to begin trading successfully. The release did not quantify its profits or the former employer’s alleged financial losses.

The background

Quantitative trading uses mathematical models and computer software to guide trading decisions. Source code is the set of written instructions behind that software, making it a commercially sensitive asset for businesses whose strategies depend on their own systems.

Ho’s former employer traded shares and other securities on exchanges in the United States and overseas. According to the indictment, it had spent more than $1bn developing its proprietary source code over several years. That figure describes development expenditure, not an assessed value of the material Ho allegedly took.

The firm restricted access to employees who needed the code for their work. Ho was among those authorised employees and, prosecutors say, his role gave him access to almost all of it.

Employees with access had to sign agreements recognising the code’s confidential status and promising to protect it both during and after their employment. The firm also maintained physical and network safeguards intended to prevent unauthorised access, according to the indictment.

The alleged conduct therefore concerns the misuse of access granted for legitimate work, rather than an outsider breaking into a system. This distinction is central to insider risk: restrictions on who can enter a system do not, by themselves, determine how an authorised person will use the information available to them.

The overlap between employment and an undisclosed outside business also features in Insider Threat Roundup’s report on a Google engineer accused of stealing AI trade secrets. In that separate case, US prosecutors alleged that the employee copied confidential files while secretly pursuing interests with two China-based technology companies. There is no suggestion in the supplied reporting that the cases are connected.

What people are saying

Acting US Attorney Edward Y. Kim said Ho allegedly breached his former employer’s trust and tried to conceal his actions through repeated false statements and requests for employees to remove evidence.

The Department of Justice’s account said Ho failed to disclose his new business when his former employer asked about his plans after leaving. It also alleged that he gave a misleading account of his relationship with the competitor that had partnered with his company.

Once the former employer discovered the new business, Ho allegedly instructed his employees to delete internal communications and the development history of its source code. The department said the employees did not comply with the instruction to delete the code history; it did not state whether they deleted the communications.

James E. Dennehy, who headed the FBI’s New York field office, said Ho allegedly shared proprietary information unlawfully while developing his own business in collaboration with competitors. He said the alleged conduct breached confidentiality agreements and harmed the former employer.

What happens next

At the time of the announcement, Ho was due to appear before Magistrate Judge Joel Richlin later on 8 January 2025. The supplied release gives no account of that hearing, any plea or a subsequent court outcome.

The charge carries a statutory maximum prison sentence of 10 years. That is the legal ceiling, not a prediction of the sentence: any punishment following a conviction would be determined by a judge.

The prosecution is being handled by the Southern District of New York’s Complex Frauds and Cybercrime Unit, with Assistant US Attorneys Rushmi Bhaskaran and Ni Qian leading the case. The FBI conducted the investigation.