Wednesday, July 22, 2009

Goldman's Schtarkes

"A Goldman Sachs Group Inc. [GSG] computer programmer who quit last month was arrested and charged with stealing codes related to a high-speed trading program that he helped develop. ... According to a complaint filed Saturday, Mr. Aleynikov downloaded 32 megabytes of data from [GSG's] computer system with 'the intent to convert that trade secret to the economic benefit of someone other than the owner.' ... In the court filing, FBI Special Agent Michael G. McSwain alleged that Mr. Aleynikov claimed after being arrested that he only intended to gather 'open source' files that he had worked on, then 'realized that he had obtained more files than he intended.' ... According to the FBI, Mr. Aleynikov got a job offer earlier this year at an unnamed Chicago firm that planned to triple the $400,000-a-year salary he was paid at [GSG]. The unnamed firm is 'new' and 'intended to engage in high-volume automated trading,' the FBI said in the court filing. Mr. Aleynikov's last day at [GSG] was around June 5. ... [GSG's] surveillance systems caught the alleged breach, and [GSG] notified the FBI", Susanne Craig and Amit Efrati at the WSJ, 7 July 2009, link:

"At a hearing in New York federal court on Saturday, assistant US attorney Joseph Facciponti [JF] argued that the [sic] Mr. Aleynikov's actions could harm Goldman and the capital markets. 'The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,' the prosecutor said, according to Bloomberg", Greg Farrell and Justin Bear at the FT, 8 July 2009.

Ed Harrison has a 10 July 2009 post at Naked Capitalism you must read and follow the link to a Jonathan Weil interview. The blogosphere is all over this. Well, Lev Dassin (LD), will you dismiss this indictment, or get laughed all over the internet? Link:

Aren't you impressed? GSG snaps its fingers and the FBI jumps. What will happen if you bring information of GSG's alleged malfeasance to the FBI? What it will do? I wonder how long McSwain will take until he finds a new job at, no, not GSG. Most prosecutors won't touch trade secret theft. They leave it as a tort. But if GSG alleges its trade secrets were stolen, jump FBI! GSG, bossman commands! With all the fraud the FBI could find, it has time for this case. What's really going on here? GSG likely told Alenyikov's new employer, Teza Technologies don't muscle in on our territory. I hope Aleyniknov forces this to trial and is acquitted. Suppose GSG went to trial on this, what then? What could come out? Remember GSG, Aleynikov can confront witnesses against him. He still has the sixth amendment. Does GSG want an open trial on this? Hahahahaha, would the Mogambo Guru say. This could be worse. Suppose GSG uses that code to engage in market manipulation. Could GSG have hired the FBI to ensure its' manipulations are never exposed? Would the FBI do that? Look at the Joseph Jett case, the Craig Gile case, etc. etc. The FBI is a Big Business tool and never forget it.

If you doubt the pervasive corruption in the SDNY US attorneys office, read JF's statement. He said GSG's market manipulations are fair. I think as JF is GSG's agent, this should be considered a GSG "admission against interest" and bind GSG. Plaintiffs' bar, start your engines! Hey LD, is JF the stupidest AUSA you've got?


Anonymous said...

OK IA...

The stink for Goldman Sachs over this program trading "leak" is so big they pump their 2Q earnings and shout out bonus payment levels... and it's still being discussed and they pay off their warrants at 98%.

Lev Dessin?

QuantHead said...

AG Cuomo should poke his head in here:

NYSE TransactTools will build upon the SFTI network backbone, which connects all Reg NMS equities and options markets in the U.S. and is also a carrier of market data in various formats. The SFTI network was built in 2002 after 9-11 to be impervious to terrorist attacks or disasters. Going forward, the goal is to expand the network into Europe and Asia to become a single global backbone for secure and reliable connectivity to all securities markets. “The idea is that a participant plugs into the backbone and gets access to all the products he wants to trade and all the markets he wants to trade,” says Johnson.

Where was Mr. Aleynikov's "open source" code connecting to in the backend of NYSE? How much extra access does Goldman Sachs have to SFTI, TransactTools and NYSE infrastructure? Are GS alums running these groups? Is there anticompetitive behavior there? The foulness is in the plumbing. Look in the sewers.

Independent Accountant said...

Lev Dassin is the US attorney for the Southern District of New York, SDNY, which covers Manhattan.