Ex-Goldman Programmer Found Guilty in Code Theft

Discussion in 'Wall St. News' started by RedDuke, Dec 10, 2010.

  1. RedDuke


    NEW YORK—A former Goldman Sachs Group Inc. computer programmer was convicted Friday of stealing the confidential source code of the investment bank's high-speed trading system.

    High-speed trading and other financial firms aggressively protect their code, considering it a trade secret and a competitive advantage. Goldman required employees to sign a confidentiality agreement as part of their employment and that any software created by them in their jobs were the property of the investment bank.

    Sergey Aleynikov's conviction is the second guilty verdict in as many months involving the theft of high-speed trading code. Last month, Samarth Agrawal, a former Société Générale trader, was convicted of stealing the bank's high-frequency trading code after he freely admitted to sharing aspects of the bank's computer code with a rival.

    The trial of Mr. Aleynikov focused on the complex computer programs used by investment banks, hedge funds and other securities firms to squeeze more profits from their trading operations. Such high-frequency trading involves rapid-fire buy and sell orders aimed at capitalizing on miniscule differences in price.

    In its second day of deliberations, the jury found Mr. Aleynikov guilty of theft of trade secrets and transportation of stolen property. He faces as much as 10 years in prison on the trade secrets charge.
    Deal Journal

    U.S. District Judge Denise Cote changed his bail conditions after the verdict, requiring Mr. Aleynikov to be subject to home confinement pending sentencing.

    The judge also suggested that his name be added to a watch list to prevent him from leaving the country. Mr. Aleynikov is originally from Russia.

    Kevin Marino, Mr. Aleynikov's lawyer, declined to comment after the verdict.

    Goldman Sachs declined to comment on the verdict.

    Federal prosecutors in Manhattan had alleged that Mr. Aleynikov secretly copied Goldman Sachs's confidential source code for its high-frequency trading platform in his last days at the investment bank and uploaded it to a server in Germany.

    Prosecutors had alleged that Mr. Aleynikov, 40 years old, intended to use it to build a similar trading platform at his new employer, Teza Technologies LLC.

    Portions of the testimony of four witnesses, including three current or former Goldman employees, were closed during the Aleynikov trial. Prosecutors had asked that portions of the trial be closed to the public to protect Goldman's trade secrets.

    Mr. Marino contended Mr. Aleynikov simply made a mistake in trying to download open-source code from Goldman, but didn't steal proprietary information from the investment bank. He said Mr. Aleynikov made no efforts to sell the information he took and didn't share it with Teza.

    In his closing argument Thursday, Mr. Marino said Teza actually was better at high-frequency trading than Goldman. "The general common notion that Goldman Sachs is the New York Yankees and Goldman's systems are the best ain't necessarily so," Mr. Marino said.

    In her closing argument Thursday, Assistant U.S. Attorney Rebecca Rohr said Mr. Aleynikov was eager to please his new bosses at Teza. Prosecutors said he used the code as a cheat sheet for his new job.

    Mr. Aleynikov was offered compensation worth about $1.15 million at Teza, nearly three times the amount he was making at Goldman at the time.

    "He absolutely knew he was taking Goldman Sachs's trading secrets...and he planned to use them for his own benefit," Ms. Rohr said.
  2. Link?
  3. RedDuke


  4. Final Chapter. Wait ! Half million lines of code ? I thought trading systems were supposed to be simple !!

    Ex-Goldman Programmer Gets 8 Years for Code Theft

    By Reuters
    Monday, March 21, 2011 6:58:53 PM ET

    NEW YORK (Reuters)—A former Goldman Sachs Group Inc. computer programmer was sentenced to eight years in prison on Friday [March 18] for stealing secret code used in the Wall Street bank's valuable high-frequency trading system.

    Sergey Aleynikov, was arrested by the FBI and charged in July 2009 with copying and removing trading code from Goldman before taking a new job at Teza Technologies LLC, a high-frequency trading startup firm in Chicago.

    A onetime collegiate-level competitive ballroom dancer, Mr. Aleynikov, 41, was convicted of trade secrets theft and transporting stolen property across state lines on Dec. 10 after a two-week long jury trial in Manhattan federal court.

    High-frequency, computer-driven trading has become an important and competitive business. The software codes that trade shares in milliseconds are closely guarded secrets.

    "I very much regret the foolish thing of downloading information," the Russian-born father of three said at his sentencing on Friday. "Part of this information was proprietary to Goldman. I never meant to cause Goldman any harm or harm anyone at the bank."

    Mr. Aleynikov's words fell short of U.S. District Judge Denise Cote's hopes for "an open and honest statement of responsibility" for his criminal conduct.

    "You did not do that," said Mr. Cote, imposing a sentence of 97 months that was within the eight to 10 years recommended by the government. Mr. Cote also fined him $12,500.

    Mr. Aleynikov's lawyer, Kevin Marino, had originally asked for a sentence of probation but in court on Friday he suggested two years was adequate for what he called Mr. Aleynikov's "foolish, tragic, horrible, ridiculous mistake."

    Mr. Aleynikov has the right to appeal the sentence. His defense lawyers have argued that the matter belonged in civil, not criminal court.

    U.S. prosecutor Joseph Facciponti said the stolen code was Mr. Aleynikov's "golden ticket" to Teza and "he stood to make millions more" there than he did at the bank. Mr. Facciponti said Mr. Aleynikov spent several months planning his move, eventually transferring 500,000 lines of Goldman Sachs source code to an outside server.

    Mr. Cote had revoked the bail of Mr. Aleynikov, a dual citizen of the United States and Russia, on the grounds that there was a risk of him fleeing before sentencing.

    Throughout the trial and sentencing phase, many comparisons were made with a similar case in the same courthouse against a former Société Générale trader, Samarth Agrawal.

    The citizen of India was found guilty by a jury last November of stealing high-frequency trading code from the French bank before going to a new job. On Feb. 28, a judge sentenced him to three years in prison and he will be deported when he completes his sentence.

    The case is USA v Aleynikov, case No. 10-00096, in U.S. District Court for the Southern District of New York.
  5. fanews


    There is no secret.

    The programmer robbed the wrong guy in wall street.

    Gimme a break 8 years in prison for what?

    Even murderer or manslaughter don't get eight years in prison.

    The punishment should fit the crime.

    The only secret is cheating.

    Who does Goldman Sachs think they are.

    Goldman Sachs and wall street are the biggest hustlers.

    Do you see the government shutting down the firm Goldman Sachs for ripping off their clients etc.

    Goldman Sachs is the cheater.

    Another thing, there is no honor among theives.

    In the mean streets(wall street), if you rip somebody off you get a bullet in the head! Forget about calling the cops.

    Don't worry about going to jail, you could get killed for ripping off Goldman Sachs.

    The harm that Goldman Sachs and it's crime network has caused to society is worse than Drug kingpins in South American and Drug dealers. and gambling rackets. Goldman Sachs has the power to cause a war. Goldman Sachs and these banksters are the biggest fraudsters

    A theif robbing another theif!
    Goldman Sachs has more power than the Governemtn. WTF are they even in the Whitehouse.;
  6. He'll be Golden-sacked in prison. :( :eek:
  7. For those interested, the code is as follows:

    Receive buy order from client.
    Place buy order in market.
    Sell position to client for more than you bought it for.
  8. Simple code in three sentences. :D :D :D
  9. RedDuke


    The guy stole from wrong people, that have the highest ties to the government, and was too sloppy to cover what he did, thus paying the high price.

    Teza probably put a lot of pressure on him to get operation up and running ASAP, but he should have hired a team of decent developers to reconstruct the code. Making 400k as a programmer at Goldman, he probably knew the main building blocks of the system. They would be up and running within a year.

    The defense was a joke: "honest mistake.....". How do you accidentally upload the code to outside server days before leaving for a competitor with a triple pay increase????
  10. lol...
    #10     Mar 23, 2011