The Aleynikov Transcript

Tyler Durden's picture

Must read. An interesting section from Facciponte:

understanding is that Goldman Sachs realized that this was a problem
based upon their review of those logs just a few days ago. The
government was not contacted until Wednesday about this matter.

think what Ms. Shroff is confusing is Goldman’s civil remedies, to the
extent that it has any, and this criminal case. Maybe Goldman can go
out and get whatever the German equivalent is of a TRO. But this is, in
the government’s view, a crime that we have shown probable cause for,
and therefore it is possible that the defendant may compound his crime
and pose a danger to the community. And the bail statute allows the
court to detain him if he is a danger.

Shoff takes offense
to this and makes the point that Goldman likely knew about the
situation for over a month, delaying, for unknown reason, until
striking when it did. Some derivative conspiracy theories could be
derived from this. But in a nutshell, the math, according to the sworn
testimony by the U.S. Attorney, is that it took less than 48 hours
between Goldman realizing it had been compromised (on Wednesday) and
the FBI arresting Sergey at Newark (on Friday).

And here is what seems to be the challenge for all hackers out there:

COURT: Well, what makes you think that it hasn’t already been
transferred since you do now know whether other people have access to
the Germany server? It’s already compromised, so the financial
institution has to take steps now if you’ve made it aware of the
compromise to adjust for the loss of its trading platform.

FACCIPONTE: Your Honor is correct. I could’ve been disseminated in this
time. It does not mean, however, that if it has not been disseminated
we should not take steps to prevent the defendant from disseminating
information if it is not already out there.

as you say, the material is on the server in Germany, if anyone can
access the material through that server, that is to say it is not only
the defendant who can access it; he might be able to provide other
persons with information that would allow them to access it, if that’s
so, then what difference does it make whether he’s detained or not if
he can communicate that information?

our understanding is that the server can only be accessed by someone
who has his user name and password.

THE COURT: Who has what, sir?

MR. FACCIPONTE: His user name and password.

THE COURT: Okay. So if he gives that to you, you can access that, isn’t that correct?

MR. FACCIPONTE: That is correct, Your Honor.

COURT: So whether he’s detained or not doesn’t him from communicating
that information to you or anyone else. And therefore the server could
be accessed and the financial institutions and the markets compromised
as you have described.

MR. FACCIPONTE: It would certainly be
more difficult, Your Honor. And I don’t believe the public ought to
bear the burden or the risk of that coming to past. In addition --

THE COURT: But if he’s detained, what prevents him from communicating the information? That’s what I don’t understand.

MR. FACCIPONTE: It would be a lot harder. He would have to at the very least enlist and accomplice.


MR. FACCIPONTE: Which people may not want to be accomplices. [TD: not so sure about that one]

THE COURT: That’s true whether he’s detained or at liberty.

FACCIPONTE: Okay. But if he’s at liberty he would not necessarily -- he
would not need an accomplice. He could just pass it on to another
server somewhere.

THE COURT: He may already have accomplices who
may have the information that can access the server in Germany. Whether
he’s detained or not, I still don’t understand why being detained means
the information can’t be disseminated to access the server.

FACCIPONTE: Because the server -- if the server had been in the United
States, Your Honor, we would already be preparing process to free --

THE COURT: But it’s not.

FACCIPONTE: The government needs a few days, given the holiday weekend,
it would be difficult to do that. But the government needs a few days
to consult with German authorities to take the steps to freeze that

So if the court is not prepared to detain the defendant
on a general showing, the government would at least ask that the
defendant be detained until such time as they can secure the server,
which we are moving to do even as we speak now.

still don’t understand why detaining him prevents him from
communicating information so that someone can access the server. If you
make that clear to me, then I understand more acutely why you’re
arguing that he should be detained.

MR. FACCIPONTE: Well, he would --

THE COURT: If it just makes it difficult, lots of things are difficult, but not impossible.

FACCIPONTE: If he were detained now, for example, I don’t believe he
would have immediate access to telephone privileges at the NCC or MDC.
I believe it takes days to set those accounts up. He would have to tell
somebody physically. I don’t believe anybody would -- he would have to
enlist a co-conspirator right now.

And I think when you weigh
the probability of him engaging in that behavior and being able to pull
that together, first is the potential risk of just letting him go, I
believe he ought to be detained. Because he still has more burdens in
prison to disseminate his information than he does if he’s out in the

So if he’s out in the street, he just needs access to a
cell phone. In prison, he needs to get access to a phone which is not a
right if he is detained. He would need to write a letter. A letter
takes several days to get to where it needs to go.

In the meantime, we would have -- we would very likely have the server locked down at that point in time.

So in a nutshell, here is Goldman's manifesto: Yesterday - Program Trading, Today - Germany, Tomorrow - The World.


hat tip Reuters

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Ned Zeppelin's picture

Hopefully we 'll learn more about how the FBI became involved and why this case is even a criminal case to begin with.  This sort of event occurs constantly in all types of industry/commercial settings; trusted employee makes off with customer list as he exits company and begins calling them to come to his new employer for services.  Nothing different here so far - in each case the alleged "thief" has authorized access to  the information, and very often the information is take as the employee leaves for only his personal reference, especially if they assisted in its creation or use.  In each case (as a business attorney I have seen this numerous times) the employer cries: "Stop Thief!" and "This will ruin the company!" But usually the police have no interest since the allegations of "theft" are murky at best and hard to prove (if one has authority to hold an asset while employed, it is tough to win on a "theft" charge) and second, the issue of the possibility of destruction to the company also requires a civil court determination, along the lines Judge Fox is asking as he probes the issue of whether it matters if Bond is free on, er bond, or incarcerated.  I suppose someone will cite statutes that make this a criminal act, but intent is an element that has to be proved,  and that is why this should be nothing more than a civil matter.

qrs521's picture

Women in summer would like to become beautiful. Everything can grab other's eyes is their best friends.Products make them beauty and confident is their favourite. Look in the street,you can see many different types of make up to show women's personality.

Welcome to the shop, the following is our products, free shipping.

Soccer Shoes Cheap Soccer Shoes Nike Soccer Shoes Adidas Soccer Shoes Nike Soccer Shoes sale Adidas Soccer Shoes sale UGG UGGs UGG Boot UGG Boots UGG Boots Sale Cheap UGG Boots UGG Boots Cheap Women UGG boots ugg boots cardy ugg cardy boots Nike Air Nike Air Max Nike Air Max Shoes Nike SB Nike Dunk Nike Dunk SB Nike Dunk SB Shoes Nike Shox Nike Shox Shoes Timberland Timberland sale Timberland boots Timberland boots online Timberland on sale New timberland boots Women Bags Women Bags Sale Women Handbags Women Handbags Sale Women New Bags Cheap Bags Cheap Bags On Sale UGG UGG boots UGG boots sale UGG boots short Short ugg Short ugg boots Ugg boots tall New women bags New women bags sale New women bags sale online Louis Vuitton Handbags Gucci bags Nike Nike Shoes Nike Shoes Sale Nike running Nike running shoes Nike trainers Nike trainers shoes Timberland Timberland boots Timberland boots sale Timberland boot Timberland boot sale Timberland boots cheap Men timberlands MBT MBT Shoes MBT Chapa GTX MBT Men Shoes MBT Women Shoes Discount MBT Shoes LV Handbags Gucci Handbags Chanel Handbags Chloe Handbags D&G Handbags Dior Handbags Fendi Handbags Hermes Handbags Jimmy Choo Bags Marc Jacobs Bags Miu Miu Handbags Mulberry Bags Prada Handbags Versace Handbags Yves Saint Laurent Balenciaga Bags Burberry Handbags LV Handbags Gucci Handbags Chanel Handbags Chloe Handbags D&G Handbags Dior Handbags Fendi Handbags Hermes Handbags Jimmy Choo Bags Marc Jacobs Bags Miu Miu Handbags Mulberry Bags Prada Handbags Versace Handbags Yves Saint Laurent Balenciaga Bags Burberry Handbags

Those who want to become most beautiful in the world should try them. Just ones can make you different. Girls who want to grab your boyfriends's heart is necessary to use them.

Anonymous's picture

At best, this is the theft of burglary tools.

Anonymous's picture

"At best, this is the theft of burglary tools."

How right you are (almost): "[At worst] ..."

VegasBD's picture

Ha! Great way to put it!

daveM's picture

Perhaps Goldman is a bit loose with their administration and this is just one example as to how their business does not protect their clients.

Insiderman's picture

Or perhaps the government doesn't want the rest of us to know that GS had license to ... do whatever they did with the software.

Anonymous's picture

They only hope for this country is that a G20 government has the code and can disclose it to impel multilateral regulation. GS owns the US government but they don't yet own all of Eurasia. The US can't be cleaned up from within, it's too hopelessly corrupt. Here's hoping Sergey is cannon fodder for the SVR.

GILLERAN's picture

I hear THAT.  I'll also wager, there are more willing 'accomplises' out there than GS imagines.

Anonymous's picture

i want a FREE SERGEY t-shirt.

Veteran's picture

Three. . .two. . .one. . .Patriot Act!  He's a goner.  GS says he's a threat and, as the government has made abundantly clear,  when GS says jump the feds say how high



dnarby's picture

It would be pretty funny if he uploaded the proggy to a German goverment server.

Anonymous's picture

Maybe his defense team can find this source for Reuters:

"NEW YORK, July 6 (Reuters) - Goldman Sachs Group Inc (GS.N) has not seen its business or clients harmed by the activities of a computer programmer being held in custody for allegedly stealing secret trading codes from the firm, a source familiar with the situation said."

Anonymous's picture

Come on... it's already out there. This is ridiculous.

Goldman is dreaming if they think this is still contained. This is likely a shared hosting company -- with dozens of in-house techs that have super-user/admin access to any of the accounts.

The entire world knows that the code is worth mad money.

If you were a $60k per year employee spending your days in ISP help-desk hell, would you not throw it on your thumbdrive just for the hell of it?

The laws of chaos theory say this thing is everywhere already.

Miles Kendig's picture

Goldman is engaging, with the assistance of the 053, AKA the USA-SDNY in the attempt of having each situation as they want it.  First the firm is alleged to have permitted its employee to transfer the software to his personal computer so he could work at home.  Then Goldman told the US Attorney's affice that the dissemenation of this software posed a grave risk to the firm and by extension the whole of the United States & free markets everywhere by permitting those in possession of this source code to manipulate markets.  Now, the discussion turned to how, after a minimum of 48 hours on a foreign server, and potentially since the period June 1-5 2009 that isolating the alleged prepratrator of the compromised code would enhance to potential that further dissemenation could be prevented from that German network where it has been for an undertermined time.  As if locking a Goldman trader away could prevent those at Goldman who have access to the traders network/login/password from accessing the traders employer account/s.


Looking more and more like a dog chasing its tail.  No one has ever accused the US Attorney's office from having to make sense as the captioned discussion demonstrates.  One would hope that with all of the high powered assistance at Goldman's beck & call that this situation would have or could be managed better.  From my limited perspective this tell tale speaks volumes.

Anonymous's picture

What makes any of the U.S. players think that either the German server/service provider or the German government give a rat's ass about any of this? It's hilarious to see the biggest perpetrator of U.S.-caused global financial ruin squirm like rats caught in a trap.

This whole thing is starting to resemble the Monty Python script 'Holy Grail' - attacking the French castle.

cheap uggs for sale's picture

It’s a interesting news,i like it.Additionally,wellcome to my website ,here are so many UGGS On Sale such as:UGG Elsey wedge|UGG Elsey wedge black|UGG Elsey wedge chestnut|UGG Elsey wedge espresso|UGG Langley|UGG Langley black|UGG Langley chestnut|UGG Lo Pro Button|UGG Lo Pro Button black|UGG Lo Pro Button blue|UGG Lo Pro Button cream|UGG Mayfaire|UGG Mayfaire black|UGG Mayfaire chestnut|UGG Mayfaire chocolate|UGG Mayfaire sand|UGG Mayfaire red|UGG Nightfall|UGG Nightfall black|UGG Nightfall chestnut|UGG Nightfall chocolate|UGG Nightfall sand|UGG Sundance II|UGG Sundance II black|UGG Sundance II chestnut|UGG Sundance II chocolate|UGG Sundance II sand|UGG Ultimate Bind|UGG Ultimate Bind black|UGG Ultimate Bind chestnut|UGG Ultimate Bind chocolate|UGG Ultimate Bind sand|UGG Ultra Short|UGG Ultra Short chocolate|UGG Ultra Short sand|UGG Ultra Short black|UGG Ultra Tall|UGG Ultra Tall chestnut|UGG Ultra Tall sand|UGG Ultra Tall balck|UGG Ultra Tall chocolate|UGG Suede|UGG Suede black|UGG Suede chestnut|UGG Suede sand|UGG upside|UGG upside black|UGG upside chestnut|UGG upside mocha|UGG Roxy Tall|UGG Roxy Tall black|UGG Roxy Tall chestnut|UGG Roxy Tall chocolate|UGG Roxy Tall sand|UGG seline|UGG seline black|UGG seline chestnut|UGG Corinth Boots|UGG Liberty|UGG Liberty black|UGG Liberty cigar|UGG Highkoo|UGG Highkoo amber brown|UGG Highkoo espresso|UGG Highkoo grey|UGG Highkoo black|UGG Knightsbridge|UGG Knightsbridge black|UGG Knightsbridge chestnut|UGG Knightsbridge grey|UGG Knightsbridge sand|UGG Knightsbridge chocolate|UGG Adirondack|UGG Adirondack brown|UGG Adirondack chocolate|UGG Suburb Crochet|UGG Suburb Crochet black|UGG Suburb Crochet chestnut|UGG Suburb Crochet chocolate|UGG Suburb Crochet grey|UGG Suburb Crochet white|UGG Kensington|UGG Kensington black|UGG Kensington chestnut|UGG Roseberry|UGG Roseberry black|UGG Roseberry sand|UGG Gaviota|UGG Gaviota black|UGG Gaviota chestnut|UGG Gaviota chocolate|UGG Desoto|UGG Desoto black|UGG Desoto chestnut|UGG Desoto chocolate|UGG Brookfield Tall|UGG Brookfield Tall black|UGG Brookfield Tall chocolate|UGG Gissella|UGG Gissella black|UGG Gissella chestnut|UGG Gissella espresso|UGG Payton|UGG Payton black|UGG Payton chestnut|UGG Payton red|UGG Bailey Button Triplet|UGG Bailey Button Triplet black|UGG Bailey Button Triplet chestnut|UGG Bailey Button Triplet chocolate|UGG Bailey Button Triplet grey|UGG Bailey Button Triplet sand|There are so much style of cheap uggs for sale ,so once you go to my website you will be very surprise.

meichou's picture

ugg boots london I saw something shocking uggs london on my way to work the other day. uggs new york While bundled in a long sleeved shirt, wool sweater and coat, with a Pashmina, hat and gloves,ugg boots london sale I saw a man with his bike a the bus stop in SANDALS. He wasn’t overly well dressed for cold weather, in jeans, t-shirt and open jacket. Now, having lived in Oregon for the past decade I have come to be aware of what “true Oregonians” consider winter attire. ugg boots london shop This primarily consists of the inbred belief that flip-flops are a necessity year round, and sweaters and umbrellas are for tourists. I do not uphold this belief.ugg boots sale london I love getting dressed up for winter, layering on leggings with my sweater dress and ugg boots new york, a sweater and a jacket, and a rotating army of scarves, hats and gloves.ugg boots london stockists I don’t enjoy being frozen, especially knowing how easy a situation that is to avoid. uggs new york sale So personally, buy ugg boots london I do not consider myself a “true Oregonian.” I like umbrellas, and only wear flip flops when it’s above 75 degrees.Based on the population of Oregon, ugg new york I’m probably in the minority. Although I have come to accept that these people are just immune to cold in a way I am not, uggs new york of sale I do still think they are crazy. I’m guessing that the good folks at UGG Australia caught wind of these people because look at what they have to offer: sandals with fleece!uggs new york on sale