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Ex-Goldman HFT Programmer Sergey Aleynikov Indicted, Faces 25 Years In Prison

Tyler Durden's picture




 

Sergey Aleynikov, the former Goldman programmer, who was arrested by the FBI in July last year on virtually a day's notice after Goldman told the FBI the Russian had stolen secrets that could be used to manipulate markets, has just been indicted on charges he stole computer codes used for proprietary high-frequency trading programs. The specific charges include theft of trade secrets, transportation of stolen property in interstate and foreign commerce and unauthorized computer access. The charges carry a total jail time of 25 years.

As is now well-known, Aleynikov, shortly before his departure from Goldman, was hired by Misha Malyshev's Teza Technologies. The firm was founded after Malyshev left his former post as head of High Frequency Trading at Citadel. According to prosecutors, in July 2009 Sergey flew to Chicago and brought a laptop and another storage device containing Goldman's proprietary souce code to a meeting at Teza's office. Malyshev has denied any allegations that he has received Goldman's prop HFT code.

The indictment comes at a time when most observers had expected this case would be settled quietly, as the prevailing sense was the Goldman had no actionable case, especially after numerous months of court delays.

The question now is how much information will be made available for discovery, and how much will be filed under Seal so that no additional Goldman HFT secrets enter the public domain.

 

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Thu, 02/11/2010 - 16:59 | 227352 SteveNYC
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Yet Paulson, Bernanke, Geithner, Blankfein, Rubin, Friedman etc etc etc. all continue to walk free.

Worse still, it is implied that Goldman, being the honest custodians that they are, are using this technology for "fair" and "good" market practices??

 

Not fair.

Thu, 02/11/2010 - 21:37 | 227802 Problem Is
Problem Is's picture

"Not fair."

Sort of like the SEC ignoring massive insider trading at Citi before the stock collapsed... Rubin cleared $30.6 million on his stock sales, Prince $26.5 million, Druskin $32 million... shareholder lawsuit... SEC couldn't miss that if they were blind...

Instead they go after some analyst for an $800 trade...

Fri, 02/12/2010 - 07:39 | 228205 bonddude
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Who's next? Matt Taibbi?

Fri, 02/12/2010 - 09:57 | 228267 Anonymous
Anonymous's picture

Simply a function of which mafia you belong to and the jurisdiction in which you decide to tweak the prevailing Mafia.

Thu, 02/11/2010 - 17:02 | 227359 Orly
Orly's picture

I sure hope Sergey squeals all over the place.

Best of luck to you, sir.

Thu, 02/11/2010 - 17:03 | 227361 SilverIsKing
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Hope he gets a fair trial with a jury who understands how the game truly works.

Thu, 02/11/2010 - 17:15 | 227382 lizzy36
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seriously there is a better chance of tiger woods becoming a celibate priest then "getting a jury who understands how the game truly works".

Thu, 02/11/2010 - 17:59 | 227421 SilverIsKing
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Okay, maybe I over did it a bit.  How about, "getting a jury that can be taught enough about how the game works?"

Thu, 02/11/2010 - 21:40 | 227805 Problem Is
Problem Is's picture

If Sergey gets Shmucky Schumer, Mary Shapiro, C. Cox and C. Dodd on that jury... They will be too hopelessly stupid to understand the case...

Thu, 02/11/2010 - 17:04 | 227362 waterdog
waterdog's picture

This guy is a fool if he does not spill the beans. Tell The judge to go screw himself if he does not get a suspended sentence. This nut stole more information about Goldman than some hackable code. This guy knows how to steal. Before him, Goldman only dreamed of stealing. If this idiot goes to prison, the oligarchy will kill him before he meets his first lover of Greek heritage.

 

 

Thu, 02/11/2010 - 17:04 | 227364 earnyermoney
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We'll see who has the stones to take on the criminal oligarchy in Russia.

Thu, 02/11/2010 - 17:59 | 227420 Anonymous
Anonymous's picture

That'd be a good fight.

Thu, 02/11/2010 - 17:09 | 227370 TraderMark
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Don't mess with Goldman Sachs.

Thu, 02/11/2010 - 18:00 | 227423 Anonymous
Anonymous's picture

I doubt the Russian oligarchs are scared.

Thu, 02/11/2010 - 17:10 | 227372 Simple
Simple's picture

nice scenario for a film ... f 0 ck goldman and brothers..

 

mfbwu

 

Thu, 02/11/2010 - 17:10 | 227373 Anonymous
Anonymous's picture

Is Government Sachs still sticking with the "in the wrong hands" defense?

Thu, 02/11/2010 - 17:11 | 227374 carbonmutant
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It's hard to imagine that they would want him on the stand... unless they have a gag order on the trial.

You know national security and all that...

Thu, 02/11/2010 - 18:01 | 227424 Anonymous
Anonymous's picture

why not? Michele Obama declared obesity a National Security threat!

Thu, 02/11/2010 - 19:16 | 227542 Anonymous
Anonymous's picture

That's why they pushed this criminally. So he'll invoke his 5th Amendment rights. If it was pursued in civil court, he'd have to testify.

Thu, 02/11/2010 - 17:15 | 227380 Anonymous
Anonymous's picture

The cat is out of the bag. If he stole technology that could be used to "manipulate markets," then what was Goldman Sachs doing with technology in the first place?

I sure hope they weren't manipulating markets. That would be a crime.

Thu, 02/11/2010 - 21:46 | 227818 David449420
David449420's picture

Actually, what has not been disclosed is WHO made the decision to prosecute him. 

Seems to me that he could quite easily open the door to an in depth criminal investigation into Goldman Sax.

Maybe there are some principled actors still left in the judicial system.

Fri, 02/12/2010 - 02:39 | 228109 tom a taxpayer
tom a taxpayer's picture

I hope it does lead to a criminal investigation of Goldman Sachs. The prosecutor, the judge, or the press are possible sources to spark it.
Otherwise, what we have is the judicial system aiding and abetting Goldman Sachs ownership of stealth burglary tools.

Thu, 02/11/2010 - 17:17 | 227385 Anonymous
Anonymous's picture

I guess you are only allowed to manipulate the market if you work for The Golden Scrote

In Goldman We Trust

Thu, 02/11/2010 - 18:03 | 227427 Anonymous
Anonymous's picture

I know...doesn't that basically say this whole thing we call a free market is just one big friggin joke?

How is this allowed to continue?

Thu, 02/11/2010 - 19:00 | 227514 PenGun
PenGun's picture

BINGO! You win nothing ...mWhahaha.

Thu, 02/11/2010 - 17:34 | 227406 Anonymous
Anonymous's picture

WHY is Lloyd Blankfein not in HANDCUFFS???

WHERE are the investigations into the crimes perpatrated against citizens WORLD WIDE???

It is obvious that Sergey simply turned over a stone and exposed them.

WHO is protecting the crimes of Goldman and WHY?

Thu, 02/11/2010 - 20:47 | 227713 Anonymous
Anonymous's picture

Because he a big, swinging dick!

Thu, 02/11/2010 - 21:49 | 227824 David449420
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Bringing this guy to trial may be the first step in getting the investigation started.

Fri, 02/12/2010 - 12:00 | 228446 tpberg7
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Divine intervention has kept him out of jail all of these years!  There are no rules when you are doing "Gods Work"

Thu, 02/11/2010 - 17:39 | 227413 JuicyTheAnimal
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Like OMG, I just downloaded the code on BT Junkie.  I browsed through it and sure enough this algo is good.  With an account of only a hunred bucks it looks like I can now move the market 8% within hours...but only up.  I just need to get me a high power computer now.  Anyone got one I can rent? 

Thu, 02/11/2010 - 20:11 | 227660 Anonymous
Anonymous's picture

Show me your hands first. In the wrong ones and all that.

Thu, 02/11/2010 - 17:39 | 227415 Anonymous
Anonymous's picture

Let's look at the simple facts here.

Goldman has a record akin to Bernie Madoffs', and it is mathematically impossible to "succeed" at the rate they have.

None of their explanations add up, and the manipulation continues world-wide.

Stop their looting, and start prosecuting!

Thu, 02/11/2010 - 18:27 | 227432 cantstopselling (not verified)
Thu, 02/11/2010 - 23:12 | 227931 Problem Is
Problem Is's picture

"Angela Merkel Clanks When She Walks" ???

Upper right corner, Market Ticker??...

Thu, 02/11/2010 - 18:16 | 227441 Prof Gulliver
Prof Gulliver's picture

I can almost hear this on Goldman's PA system: "Paging Jack Ruby! Jack Ruby, please report to the courthouse."

Thu, 02/11/2010 - 21:39 | 227804 poor fella
poor fella's picture

Niiice! +3

He'll probably choke to death on a boiled pea or shank himself 100+ times in the face..

 >=ß

Thu, 02/11/2010 - 23:54 | 227986 arnoldsimage
arnoldsimage's picture

On June 11, 2006 The New York Times reported:June 10 — Three detainees being held at the United States military prison at Guantánamo Bay, Cuba, committed suicide early on Saturday, the first deaths of detainees to be reported at the military prison since it opened in early 2002, United States military officials said. The new study exposes how the NCIS report purports that all three prisoners on the prison's Alpha Block did the following to commit suicide: • Braided a noose by tearing up their sheets and/or clothing.
• Made mannequins of themselves so it would appear to the guards they were asleep in their cells.
• Hung sheets to block the view into the cells.
• Stuffed rags down their own throats well past a point which would have induced involuntary gagging.
• Tied their own feet together.
• Tied their own hands together.
• Hung the noose from the metal mesh of the cell wall and/or ceiling.
• Climbed up on to the sink, put the noose around their necks and release their weight, resulting in death by strangulation.

Thu, 02/11/2010 - 18:15 | 227443 buzzsaw99
buzzsaw99's picture

Put me on that jury. heh heh

Thu, 02/11/2010 - 20:36 | 227703 Anonymous
Anonymous's picture

I bet they'd disqualify any Zero Hedge reader. Sorry buzz.

Thu, 02/11/2010 - 18:19 | 227447 Captain Willard
Captain Willard's picture

They have their own police force and criminal justice system now. Khalid Sheik Mohammed will get a fairer trial. He'd get less than 25 years had his laptop been full of blow.

Thu, 02/11/2010 - 18:23 | 227450 JohnKing
JohnKing's picture

Free Sergey!

Thu, 02/11/2010 - 18:32 | 227462 Anonymous
Anonymous's picture

Possession of proprietary burglary tools.

Thu, 02/11/2010 - 18:37 | 227468 Ripped Chunk
Ripped Chunk's picture

"arrested by the FBI in July last year on virtually a day's notice"

Thats a quick investigation for probable cause.....................

Fri, 02/12/2010 - 00:41 | 228027 JohnKing
JohnKing's picture

bah..this is about gov't sponsored enforcement of employment agreements. There was no investigation. The prosecutor and "investigators" need to be investigated on this one. I wonder how many programmers are still wanting to work at the squid.

Thu, 02/11/2010 - 22:06 | 227846 el Gallinazo
el Gallinazo's picture

Sergey will never get a fair trial in NY.  They will need a change of venue to Bogram, Afghanistan.

Thu, 02/11/2010 - 22:17 | 227862 Anonymous
Anonymous's picture

Got exactly what he deserved. Do you really think you can cross the Mob and live? This guy screwed with the Vampire Squid. I'm amazed he's still breathing.

Anyway he was pretty stupid to be walking around with GS proprietary code in any type of storage device. Admittedly GS is the bigger crook in this little morality play, but if you're gonna try and pull off a heist of this magnitude then at least use a little more, no a lot more, discretion.

Walking around with this type of information is tantamount to asking to be pinched by the Feds. Makes you wonder if Teza Tech wasn't an accessory to the whole thing, or worse yet, a snitch in the whole operation, either way Sergey may need to learn to enjoy being ass raped, at the trial and in prison.

Thu, 02/11/2010 - 22:33 | 227882 Anonymous
Anonymous's picture

Hmmmm, consider the treatment Martin Armstrong received in a New York trial. I don't think it's looking good for Sergey.

Thu, 02/11/2010 - 22:52 | 227905 Anonymous
Anonymous's picture

So Goldman admits they are engaged in HFT. This is legal activity?

Thu, 02/11/2010 - 23:16 | 227941 Anonymous
Anonymous's picture

what are you all talking about? This is simply about industrial theft. All that the prosecution has to demonstrate is that he stole and intended to steal Goldman property. It doesn't really matter what it was used for, that just makes good press.

Even if he had something to say, I doubt that he will get the chance cause he will be asked about stealing someone elses IP not what the IP was used for or how it worked.

Don't hold your breath for fireworks, this promises to be did he or didn't he do it.

Thu, 02/11/2010 - 23:36 | 227964 Unscarred
Unscarred's picture

Paul Solman on PBS NEWSHOUR tonight examines whether Goldman is actually a hedge fund. Solman looks at the issue and practice of front-running and risk management at the investment bank.

Is Goldman just a Big Hedge Fund?

After arriving fashionably late, who else will join the party?

Fri, 02/12/2010 - 00:13 | 228008 Anonymous
Anonymous's picture

Unbelievable! Goldman rules the country...forget about politicians, true leaders stand up!

Fri, 02/12/2010 - 01:07 | 228054 Anonymous
Anonymous's picture

No rule of law in NY, like Chicago in the 20s. Martin Armstrong held for 7 years in contempt, finally pleaded guilty. The banksters wanted his proprietary forecasting system to use for their own evil purposes.

Fri, 02/12/2010 - 01:52 | 228084 Anonymous
Anonymous's picture

Get a man to steal for you he gets a wage, teach him how to steal he can steal for life.

Fri, 02/12/2010 - 10:11 | 228291 Hephasteus
Hephasteus's picture

The script kiddie who did this for goldman is going to go to jail if he tells other people how he did it. LOL

http://www.gata.org/node/8322

You can't be a superasshole today without supercomputers.

Fri, 02/12/2010 - 21:43 | 229366 Anonymous
Anonymous's picture

It does not look like Goldman got a good case. If I would be Aleynikov's lawyer I would call the people from this former group to testify and to take lie detector. Every morning I take a train to NYC with a guy who works at former Aleynikov's group at Goldman. He told me the following:

1. Aleynikov did not have access to actual strategy code.
2. He wrote some tools which monitors system perfomance using exotic programming language "Erlang". It was a subject of jokes, since nobody in sane state of mind would use this language. The value of these tools is really minimal, but he decided to take it anyway.
3. Erlang is open source (it could be donwloaded from the internet), but Aleynikov was lazy and decided to download his scripts with Goldman snapshot of Erlang open source.

That's all.

Mon, 04/19/2010 - 10:05 | 307803 Tom123456
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