The prominence and earning power of quantitative traders, who build computer algorithms to exploit opportunities in the market, has risen sharply in recent years, rivalling and sometimes overtaking that of traditional discretionary traders who make investment decisions themselves.
One of the best-known London firms, XTX Markets, paid £682 million to its billionaire founder Alex Gerko last year as it generated a £1.3 billion profit pool divided among 31 members of its partnership.
Allain is a data scientist who worked for Braunford LLP, part of the G-Research group, a research firm that uses technology to predict and profit from movements in financial markets.
G-Research is led by Ben Leadsom, husband of Andrea Leadsom, the former Conservative government minister. It was founded by Peter de Putron, a Jersey-based financier and Leadsom’s brother-in-law. The firm regards its technology and related trading strategies as trade secrets.
Allain was placed on 12 months’ paid gardening leave in March after he resigned to join Citadel Securities.
A court-ordered inspection revealed that between Saturday March 22, the day after he accepted the Citadel offer, and the following Monday, when he resigned, Allain took 1,087 photographs containing confidential information.
He used an iPad that had been given to him as a welcome gift by Citadel to take photos of a laptop screen. More than 400 of the photos related to a project called Humber, which G-Research claims is a highly valuable trading strategy developed after significant investment.
It was also found that over a period of months, dating back to at least July last year, Allain created and amended text files containing confidential information. The text files purportedly show that Allain repeatedly recorded that he could “replicate” Humber for a competitor, but the meaning of this is disputed by the parties in the civil legal dispute.
Allain has accepted that he copied text files and took photographs which contain a substantial amount of confidential information, but claims that the material was “not of trade secret quality”, according to a recent judgment following a case management hearing.
Among its claims against Allain, G-Research alleges he breached his employment contract, duty of confidence and misused confidential information and was “unjustly enriched” at its expense.
G-Research is seeking to extend Allain’s restriction on joining a competitor for a further two years beyond the end of his gardening leave, as well as financial and other remedies.
Allain, who was hired by G-Research in 2021, denies liability. He claims that the text files were made to help with interview preparation and that their contents were not disseminated. He claims the photos were an “aide-mémoire” and that while he acted impulsively in taking them, they were also not disseminated. He denies that he has caused, or could cause, G-Research harm.
He also claims that some of the information was in the public domain and so not confidential.
A key issue in the case is the ability or otherwise of a rival to use the allegedly misappropriated material.
The claimants are Braunford and Corbiere Limited, a Marshall Islands-entity which owns G-Research’s intellectual property.
A Citadel spokesman said the firm had rescinded Mr Allain’s offer.
A trial is due to be held in February. G-Research and Allain were approached for comment.
