Another week, another indictment for the theft of trade secrets. This time, the Manhattan District Attorney’s office returned an 11-count indictment against Kang Gao, a 29 year old China native. The indictment alleges that Gao stole confidential information from his former employer, Two Sigma Investments LLC, which uses complex mathematical models in its business of trading securities.
Gao, an analyst with Two Sigma, resigned from the firm in February after just three years. Prosecutors allege that, before leaving Two Sigma, Mr. Gao used remote viewing software to access Two Sigma’s computer systems, including its proprietary trading models, and also sent confidential documents, including trading strategies, models, and presentations, to his personal email address. Mr. Gao’s attorney claims these actions were done simply in the course of doing his job.
After initially setting bail at $150,000 cash or a $500,000 bond, Justice Jill Konviser of the New York State Supreme Court increased Mr. Gao’s bail to $1,000,000 after arguments from the Assistant District Attorney that Mr. Gao recently traveled to China to present a plan for a potential new business and had also met with one of Two Sigma’s competitors in the United Kingdom. Justice Konviser also noted that there is presently no extradition treaty between the United States and China.
It is not yet known how severe the penalties could be if Mr. Gao is convicted. Prosecutors have not yet alleged the value of the information taken by Mr. Gao, but Two Sigma is valued at approximately $18 billion. Mr. Gao has also been sued by Two Sigma in a civil action related to these circumstances.