Michael Lewis Article on Goldman and Serge Aleynikov

New article by Michael Lewis (author of Moneyball, Liars Poker, and The Big Short).

http://www.vanityfair.com/business/2013/09/michael-lewis-goldman-sachs-programmer

September 2013
Michael Lewis: Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer?

A month after ace programmer Sergey Aleynikov left Goldman Sachs, he was arrested. Exactly what he’d done neither the F.B.I., which interrogated him, nor the jury, which convicted him a year later, seemed to understand. But Goldman had accused him of stealing computer code, and the 41-year-old father of three was sentenced to eight years in federal prison. Investigating Aleynikov’s case, Michael Lewis holds a second trial.

...

“Even if he had taken Goldman’s whole platform, it would have been faster and better for him to write the new platform himself,” said one juror.

Several times he surprised them with his answers. They were all shocked, for instance, that from the day he arrived at Goldman he had been able to send Goldman’s source code to himself weekly without anyone at Goldman saying a word to him about it. “At Citadel if you install a USB drive into your workstation, someone is standing next to you within five minutes, asking you what the hell you are doing,” said one. Most were surprised by how little he had taken in relation to the whole: eight megabytes in a platform that consisted of an estimated one gigabyte of code. The most cynical among them were surprised mostly by what he had not taken.

“Did you take the strats?” asked one (meaning Goldman’s trading strategies).

“No,” said Serge. That was one thing the prosecutors hadn’t accused him of.

“But that’s the secret sauce, if there is one,” said the juror. “If you’re going to take something, take the strats.”

“I wasn’t interested in the strats,” said Serge.

“But that’s like stealing the jewelry box without the jewels,” said another juror.

“You had super-user status!” said the first. “You could easily have taken the strats. Why didn’t you?”

“To me, the technology really is not interesting,” said Serge.

“You weren’t interested in how they made hundreds of millions of dollars?” asked someone else.

“Not really,” said Serge. “It’s all one big gamble, one way or another.”



All for 32MB of code and what he wanted it for was the open-source (his assertion)...the 32MB was actually 8MB he sent to himself on four separate occasions.

 

perfect example of US justice system at work. they are completely incompetent and don't know s**t. look at those questions...man..oh man..likely paid by one way or another by GS to put the guy in prison and out of business as an example for others,who may think of something similar.

 

Wow great read. Thanks for posting.

 

Really good article ... Michael Lewis tries to break it down for the non-tech people. I think programmers such as myself can understand this guy, I sent a donation for his legal defense.

 

Well, the article is long and I like to read the responses to it too, but I will shot first and read later:

Companies usually think/say that codes programmers write for them are proprietary and belongs to them. Specially when we are talking about a trading (thus money making) code. So taking it away and letting others or the programmer for himself use it can be easily classified as theft. If I were a company I sure wouldn't want my programmers to go to other companies and shop their code written for me.

So I don't think it is the technical, hard to understand nature what got him into trouble, but the classification of his act...

Now I am off to read....

P.S.: I like ML and I usually agree with him, so I am curious if he can change my mind...

 

OK, after reading the article and the responses, here is my take....

Apparently, Serge was an incredibly naive dude, but I don't hold it against him because others, similar geeks mentioned in the article also don't know much about real life. Maybe Machiavelli should be required reading material in high school.

So here is the story in short: GS the dirty player is finally catching up to its competitors in the HFT game due to Serge's work. Then Serge is leaving for a competitor. GS screws him royally,twice because Serge gave them a smoking gun.

Why did GS do it? Well, obviously this was what the other geeks didn't get either:

"The real mystery, to the insiders, wasn’t why Serge had done what he had done. It was why Goldman Sachs had done what it had done. Why on earth call the F.B.I.? Why coach your employees to say what they need to say on a witness stand to maximize the possibility of sending him to prison? Why exploit the ignorance of both the general public and the legal system about complex financial matters to punish this one little guy?"

Dear geeks, I will tell you why. I am surprised ML didn't figure it out... :

1. To make an EXAMPLE out of him, to discourage code sharing/stealing for all the other employees.

2. To deny a competitor a valuable employee as long as possible. If they are making less money, GS might be making more.

And I will throw in even these:

3. To show legal power. Just because they can. Don't mess with GS, they have the government in their pocket...

4. Why would you leave for a competitor? Aren't you happy with us?

If you play with sharks, I would say at least being able to swim is a required ability. If you are leaving for a competitor, you would better make sure, in that time you are following all the rules and laws to the letter, so they can not fuck you.

And by the way, in the words of Serge:

“I knew that they wouldn’t be happy about it,” he says, because he knew their attitude was that anything that happened to be on Goldman’s servers was the wholly owned property of Goldman Sachs—even when Serge himself had taken that code from open source. When asked how he felt when he did it, he says, “It felt like speeding. Speeding in the car.”

 

Yep, there is no edge in playing with sharks.

The guy broke company confidentiality and policy, no question about that. And that is first wrong and then dumb. But did he commit a crime? Trade secrets? Spying? Most of it was open-source - starts to paint a different picture of intent? Who knows. It comes down to the source code.

It's interesting that the jury was a majority of high-school grads and no programming experience...

that he was charged under the 1996 Economic Espionage Act - remember that guy from Boeing who had hundreds of thousands of Boeing documents hidden in his house and was spying for China? He was convicted under that, and was sending trade secrets to China for 30 years..(but he said he was just an ordinary guy of course).

 

I just lost a lot of respect for Michael Lewis. Sergei Aleynikov got greedy took something he shouldn't have, broke the confidentiality agreement he had signed, its industrial espionage. Goldman Sachs doesn't just go over and have ex-employees arrested for no reason, if they did 50% of the hedge funds and private equity firms wouldn't exist. Bashing Goldman Sachs for every ill around the world and specifically in US got old.

 

“Did you take the strats?” asked one (meaning Goldman’s trading strategies).

“No,” said Serge. That was one thing the prosecutors hadn’t accused him of.

“But that’s the secret sauce, if there is one,” said the juror. “If you’re going to take something, take the strats.”

“I wasn’t interested in the strats,” said Serge.

“But that’s like stealing the jewelry box without the jewels,” said another juror.

“You had super-user status!” said the first. “You could easily have taken the strats. Why didn’t you?”

“To me, the technology really is not interesting,” said Serge.

“You weren’t interested in how they made hundreds of millions of dollars?” asked someone else.

“Not really,” said Serge. “It’s all one big gamble, one way or another.”

You have a tech guy who is writing code for low latency automated options market making strategies, but he is only interested in the distributed networking and mq code. He views options market making as "one big gamble" - while this is actually one of the lower risk lines of business.

It's a great example the chasm between developers and traders.

He is supposedly a NYC top 20 HFT coder, yet, he has no idea about how the business works, which is tragic, to the point of being humorous. It speaks volumes about developers being a replaceable commodity, while traders are the only talent that matters.

This game is pretty simple. Go and poach developers from telcos or imbedded / mechatronics companies. Pay them up to $100K and they will do anything you want.

 

yada yada yada, sure, all jurors were paid and bribed. Dude, even those made up questions (of course they are made up, no juror uses the term "strats", nobody) are questions you had to look up in a dictionary to comprehend but you believe you know the ins and outs of Goldman Sachs to judge them. That guy stole computer code, which one does not even matter with the intend to get hired elsewhere. He presented the code to a fund in Chicago in the hopes to be compensated for that, whether monetarily or through a job offer does not matter. Get a life and above all grow some sense for right and wrong!!!