The criminal trial of a quantitative trader for allegedly stealing algorithmic trading code will also put a spotlight on the secretive industry in which he worked.

Richard Ho went on trial Monday on charges that he stole the code from his former employer, Headlands Technologies LLC, to set up his own trading firm. Prosecutors allege Ho then used the code to defraud Tower Research Capital into investing with him.

Ho, a 38-year-old Cambridge University computer science graduate, has pleaded not guilty. He faces as much as 20 years behind bars if convicted of the most serious fraud charge against him. Opening statements in the trial are expected to begin Wednesday.

The case is a rare criminal prosecution over the alleged theft of Wall Street trade secrets and one of the first to focus on the code behind trading algorithms. A public trial is likely to at least somewhat pierce the veil of secrecy that surrounds quant trading and the firms that specialize in it. Ho’s lawyers have protested that the government has blown up what should be a civil dispute at most.

For Chicago’s Headlands, a firm founded by Citadel alumni, the trial could bring new and unwanted scrutiny of a source code the firm says it spent $1 billion to develop. Prosecutors have taken great pains to continue keeping the code secret despite the public nature of a trial. Many hearings in the case have already taken place in closed courtrooms, and that’s expected to be true for the trial itself.

“In reality, all that is necessary is for a single member of the public (or media) to learn about the trade secrets and then share that knowledge with others, including current or future competitors that would be heavily incentivized to obtain it,” Headlands wrote in an August letter to the judge.

But Ho’s defense has signaled that it will argue that quant code isn’t a trade secret at all because the strategies it drives degrade and have to be continually updated to remain competitive. They plan to call as an expert witness Mark Hendricks, a University of Chicago math professor who has worked with dozens of quant firms.

According to court filings, Hendricks is expected to testify that Headlands’ code has no economic significance because it involves common trading concepts that exist at other firms and are “all known or readily ascertainable by others in the industry.”Beneath the case against Ho is also a simmering rivalry between Headlands and Tower.

Neither firm was identified in the indictment, but Headlands, referred to by prosecutors as “Firm-1,” came forward and also said Tower was the “Firm-3” that invested with Ho. When Ho was first charged at the beginning of 2025, he was only accused of stealing from Headlands. But prosecutors amended the indictment in May to additionally charge Ho with defrauding Tower.

That’s not how Headlands sees it, though. The Chicago firm has asserted in private litigation that it believes that Tower actively colluded with Ho, backing him with $15 million in capital. In focusing on Tower’s relationship with Ho, the trial is likely to highlight that firm’s decentralized “pod shop” structure, built around semi-autonomous teams.

Headlands was founded in 2010 by Matt Andresen, Jason Lehman and Neil Fitzpatrick, all former executives in Ken Griffin’s Citadel financial empire. Chicago-based Headlands now has five offices including London and Singapore.

Andresen declined to comment on Ho’s case ahead of trial. Tower has also declined to comment on the litigation or the criminal case.

Tower, one of the oldest firms to focus on computer-based algorithmic trading, was founded in 1988 by Mark Gorton and Alistair Brown, former traders at Credit Suisse First Boston. The firm has moved into other business areas beyond its core business of a market-making high frequency trading shop, including operating desks that conduct slower trading and running the infrastructure behind fixed-income exchange-traded funds.

Ho joined Headlands in July 2019 as a quantitative researcher and developer. Prosecutors allege that he secretly began his own company, One R Squared, which they called “Firm-2,” in the spring of 2021 using Headlands’ source code. These allegedly included basic building blocks of Headlands code, known as “atoms,” as well as the predictive formulas that govern its trading, known as “alphas.”Headlands has claimed that the atoms and alphas could command more than $100 million in licensing fees if they were offered on the open market.

In December 2020, while still employed at Headlands, Ho allegedly began talking to Tower about a deal for him to operate a trading team using that firm’s capital, resources and infrastructure. Tower ultimately agreed to purchase a minority ownership stake in One R Squared, pay Ho’s employees and expenses, and to provide the firm with access to capital and certain trading infrastructure and other resources, according to the indictment. During his discussions with Tower, prosecutors claim Ho misrepresented to Tower that he was writing his firm’s code from scratch.

Headlands separately sued Ho in state court in Illinois in 2023, accusing him of usurping the code and colluding with Tower. In its suit, Headlands said Tower’s backing compounded the harm of Ho’s code theft. Headlands’ claims against Tower are the subject of a confidential arbitration.

“Tower’s trading platform allows it to execute trades with exceptional speed and precision,” Headlands said. That meant One R Squared could make the same trades using the same alphas before Headlands could. The result, it claims, is that Ho began usurping Headlands’ commodities and foreign exchange futures trades, costing it tens of millions of dollars a month in profit.

The case is US v Ho, 25-cr-0003, US District Court for the Southern District of New York (Manhattan).