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Sergey Aleynikov Strikes Back, Files Goldman Subpoena

Tyler Durden's picture




 

Sergey's alleged Goldman code-theft case, which seemed to be on the fast track to being promptly settled out of court, just took an odd turn. Matt Goldstein over at Reuters reports that instead of keeping quiet, Sergey has taken the offensive and has filed a subpoena on Goldman Sachs, "seeking access to some information." Goldman's response is a not very surprising motion in federal court to quash the subpoena. Either this is a red herring by Sergey, trying to make his plea deal case stronger, or there is indeed something in Goldman's books that needs further observation, and would, presumably, shed much needed light on either the Aleynikov affair, HFT, or both.

The case is Disctrict Court 09-mj-01553 in Southern District of New York. If readers have stumbled across the subpoena request, would they please bring it to our attention.

 

 

 

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Mon, 08/10/2009 - 12:00 | 31506 Anonymous
Anonymous's picture

Goldman Sach's Alumni are in all facets of the courts, the government, even in the Oval Office. He doesn't stand a chance unfortunately.

Mon, 08/10/2009 - 12:14 | 31524 MountainHawk
MountainHawk's picture

Yes, thanks for the reality check. What was I doing thinking there was actually a chance something might be exposed.

Mon, 08/10/2009 - 20:05 | 32305 inflationary (not verified)
inflationary's picture

We KNOW they made huge profits driving the markets up.

Only a fool would trust that they don't pick the cherries this fall.Another bear raid is coming because only a profit locked in is a profit. Nothing else counts.

Mon, 08/10/2009 - 12:10 | 31511 Dear Infinity
Dear Infinity's picture

I hate it but, I went net long today. Very unfortunate, but covered my shorts in the morning panic. This isn't stopping.. not yet. Expect good things from retail report. Very easy to squeeze all shorts right now. Scope IYR.

Mon, 08/10/2009 - 12:44 | 31553 ivant
ivant's picture

there was a panic in the morning?

Mon, 08/10/2009 - 13:01 | 31575 Anonymous
Anonymous's picture

Yeah.... I'm always panicking, every morning when I wake up.... However, I think it had something to do with my girlfriend cheating on me.... ;-)

Tue, 08/11/2009 - 08:30 | 32649 ivant
ivant's picture

Are you for real? That sucks!

Mon, 08/10/2009 - 12:08 | 31516 Project Mayhem
Project Mayhem's picture

Interesting...  Seriously , who the fuck is this Sergey guy? 

And is he friends with this fearsome man?  http://www.russianspy.org/putin_shooting-gun.jpg

 

Mon, 08/10/2009 - 12:36 | 31538 Anonymous
Anonymous's picture

If anyone stands a chance and can take out GS and other sharks, it's the Russians. They lost billions in last years bear raid.
Can't say I'm all that much bothered by it.

Mon, 08/10/2009 - 12:45 | 31554 BorisTheBlade
BorisTheBlade's picture

In Russia he's no one and obviously not a friend of the fearsome guy.

Mon, 08/10/2009 - 12:13 | 31522 MountainHawk
MountainHawk's picture

Awesome find...I hope his effort is honest to shed some lights on to these criminals.

Mon, 08/10/2009 - 12:22 | 31527 peterpeter
peterpeter's picture

Assuming that he did actually steal code:

Either what GS is doing is illegal in which case he is both complicit and a thief, or it is legal and he is merely a thief.

It's certainly an interesting turn of events, and I'd love to read a list of documents he is trying to get a hold of - but just keep in mind that this guy is not a role model for ethical behavior.

 

Mon, 08/10/2009 - 14:00 | 31687 Anonymous
Anonymous's picture

I don't think it was theft, though.

He had repeatedly *throughout his employment* uploaded information to a server to work on it elsewhere. My understanding is that many people in the IBs do the same thing, but I don't know this for sure--it's just based on what I read (maybe you now better than I in this respect).

He may have shown poor judgment, but stupidity does not necessarily translate into malevolence.

Mon, 08/10/2009 - 12:23 | 31528 capitalisa
capitalisa's picture

One may have to wonder if Sergey actually "stole" the information.

Mon, 08/10/2009 - 12:34 | 31529 Alexander Supertramp
Alexander Supertramp's picture

You rock, TD.  This has already progressed much further than I would have ever believed.  Charge on.

Mon, 08/10/2009 - 12:29 | 31532 Anonymous
Anonymous's picture

It would seem to me Sergey is holding all the cards if he decided it was time to go public with all of the GS HFT Tricks of the Trade! Is Sergey our Watergate break-in?

Mon, 08/10/2009 - 12:42 | 31550 peterpeter
peterpeter's picture

If the theft allegations against him are proven to be true, one could make a strong case that he is responsible for the largest theft of all time.

Any trade secrets that he would divulge would only further compound his problems, since he would be in clear violation of his employment agreement, and he'd have to not only fight with the DA, but also an army of GS attorneys in civil court as well.

If GS was worried that they were doing anything illegal and that this guy could produce evidence against them, they would not have turned to the FBI.

He can try to make this painful for GS with the hopes that he'll strike a deal to reduce the charges against him, but he is not the one holding the cards.  He is just in a heap of trouble.

Mon, 08/10/2009 - 13:06 | 31586 Anonymous
Anonymous's picture

Unless GS does not know what he knows...

Mon, 08/10/2009 - 16:55 | 32025 Apocalypse Now
Apocalypse Now's picture

That's my initial reaction as well, I hope someone can produce the subpoena he filed against Goldman - if Tyler posts this before any other sight - kudos.

Mon, 08/10/2009 - 12:32 | 31533 Anonymous
Anonymous's picture

If GS ordered the entity formerly known as the US Government (now a wholly owned subsidiary of GS) to squash you can bet your ass they will be "squashing" before too long...

Mon, 08/10/2009 - 12:34 | 31535 Anonymous
Anonymous's picture

GS use the USG for the Unlimited Sacks of Gold

Mon, 08/10/2009 - 12:57 | 31572 Anonymous
Anonymous's picture

somebody is holding someone's sack alright

Mon, 08/10/2009 - 12:33 | 31534 Anonymous
Anonymous's picture

GS had a 98% trading success rate recently didn't they? No-one apart from the likes of Madoff have that good a record do they!

Mon, 08/10/2009 - 12:35 | 31536 Project Mayhem
Project Mayhem's picture

precisely

Mon, 08/10/2009 - 12:38 | 31542 Anonymous
Anonymous's picture

Difference between Madoff and the Treasury?

Madoff doesn't have a printing press.

Mon, 08/10/2009 - 12:38 | 31543 Cheeky Bastard
Cheeky Bastard's picture

even madoff was not so obviously stealing other peoples money as GS is doing right now ...

Mon, 08/10/2009 - 13:03 | 31582 Anonymous
Anonymous's picture

We KNOW they made huge profits driving the markets up.

Only a fool would trust that they don't pick the cherries this fall.

Another bear raid is coming because only a profit locked in is a profit. Nothing else counts.

Mon, 08/10/2009 - 15:29 | 31869 dark pools of soros
dark pools of soros's picture

but dont they want to hold over a year to pay less taxes on........ oh wait...

Mon, 08/10/2009 - 12:36 | 31537 kylenstone
kylenstone's picture

Our work is not finished detailing the connections between Goldman Sachs executives and the US Government: http://littlesis.org/list/39/Government_Officials_with_Ties_to_Goldman_S...

Mon, 08/10/2009 - 18:35 | 32181 Raymond Shaw
Raymond Shaw's picture

You forgot Gary Gensler - current Commodities and Futures Trading Commission head.  He is an ex-Goldman guy.

Tue, 08/11/2009 - 22:14 | 33450 kylenstone
kylenstone's picture

Raymond,

This is fantastic!  Thanks for the suggestion - I'll add him immediately.

Mon, 08/10/2009 - 12:37 | 31539 Anonymous
Anonymous's picture

What is Program Trading / Flash Trading ?
http://www.youtube.com/watch?v=VRhyWZnGjyc

Mon, 08/10/2009 - 12:39 | 31544 MinnesotaNice
MinnesotaNice's picture

The government will have to base part of their case on the value and significance of the code that was allegedly stolen... and in order to do that the defendant will have to be able to access the Goldman information which surrounds the entire issue... but it is probably just a move to make his plea case stronger with the covert threat to make 'things messy' for Goldman if the prosecution gets to aggressive... Goldman and the government are probably huddled together deciding their next strategic move.    

Mon, 08/10/2009 - 12:42 | 31549 Comrade de Chaos
Comrade de Chaos's picture

GS legal department: OMG we created a monster...someone dial homeland security hot line ASAP!

Mon, 08/10/2009 - 12:48 | 31560 ivant
ivant's picture

In terms of who is this guy: certainly isn't some guy of the street. To steal what he stole, he would need to be an amazing programmer. We are talking some serious security here. I wouldn't be at all surprised if crazy Putin would be involved. Russians are capable of something like this.

Mon, 08/10/2009 - 13:05 | 31585 Comrade de Chaos
Comrade de Chaos's picture

Russians are puzzled, dazzled and confused at this moment. They ve been soul-searching for a new political system that would combine a "market" economy and substantial government oversight. And now it seems the rest of the world and unfortunately us moving in the similar direction. (towards the "Better" future.)

KGB is getting a justification for everything it has done in the last 9 years (silenced any opposition and freedom of speech) from a very unexpected angle.

Tue, 08/11/2009 - 08:38 | 32654 ivant
ivant's picture

Well I am not sure they are so dazzled lol. They are just taking everything and making it private. That is belonging to the Government or Putin/Medvedev. And i mean everything. Putin had close to 48 bn tucked away due to Gazprom doing so well. Based on a very credible source in Russia, the idea is to create an idea of a Czarist Russia. I wonder how long it will be when Obama becomes Czar. :P But you are correct about KGB and what they are doing. Policemen are now covered to commit any crime on the street, while KGB does the same above.

Mon, 08/10/2009 - 13:13 | 31601 Anonymous
Anonymous's picture

I agree.... Sergey is no two bit punk off the street. Someone is pulling strings, however, it's not Putin, probably not a Russian.... I contracted a couple of Russian comp hacks about 15 years ago (1994) to do some work for me, they were brilliant....

Tue, 08/11/2009 - 08:40 | 32656 ivant
ivant's picture

The level of computer education there is very high. My dad worked as a programmer here in Australia for a while, and he met a few programmers from there who started in the 80s who are amazing. Those amazing guys said that the new guys coming out are even more amazing. I am sure that every country has some crazy ultra-nerds going around. I guess the comp dudes did the job well and were cheap :)

Mon, 08/10/2009 - 13:33 | 31633 Miles Kendig
Miles Kendig's picture

The simple odds are that an organization as big & complex as GS there are likely some soft spots.  It is simply the nature of large organizations.  The really interesting thing would be if Aleynikov already has the information he was requesting.  This is a common ploy in these kinds of circumstances just to see what your opponent will to in response to the stimuli.

Mon, 08/10/2009 - 13:34 | 31635 Anonymous
Anonymous's picture

It simply doesn't compute that Sergey Aleynikov is the mastermind industrial spy he is being made out to be. I have assembled the following links to various coding ventures in which he participated online. Since how often do criminal masterminds spend their spare time on open source hobby boards? It's about as geeky as it gets.

http://archive.netbsd.se/?ml=erlang-bugs&a=2008-08&m=8236684

http://caml.inria.fr/pub/ml-archives/caml-list/2007/06/b4750e531832d248d...

http://www.iterasi.net/openviewer.aspx?sqrlitid=tfgselr3sucrhenj4dd6aq

http://www.trapexit.org/Building_a_Non-blocking_TCP_server_using_OTP_pri...

http://www.trapexit.org/forum/viewtopic.php?p=28588&sid=fb945ccebd95029c...

http://forum.trapexit.org/mailinglists/viewtopic.php?t=10261&view=next&s...

http://groups.google.com/group/erlang-questions/browse_thread/thread/0d4...

http://www.erlang.org/cgi-bin/ezmlm-cgi/4/37518

http://www.erlang.org/cgi-bin/ezmlm-cgi/4/38861

http://mryufeng.javaeye.com/?page=2&show_full=true

http://asdfasdf.debian.net/~tar/debian/ezm3/ezm3-1.2.ds1/build/home/sgol...

http://www.erlware.org/lib/5.5.5/gen_socket-0.1/gen_socket_listener.html

http://www.erlware.org/lib/5.6.3/gen_socket-0.1.3/gen_socket_sup.html

http://www.nabble.com/Low-Level-Socket-Example-td18949584.html

http://www.nabble.com/forum/Search.jtp?query=saleyn

http://oracaml.sourceforge.net/

http://article.gmane.org/gmane.comp.lang.erlang.general/33648

http://article.gmane.org/gmane.comp.lang.erlang.general/32221

http://osdir.com/ml/lang.erlang.bugs/2007-10/msg00010.html

http://code.google.com/u/saleyn/updates

That the entire Goldman episode was nothing more than the innocent activity that Aleynikov claims it to be is given credence by this pattern. At most it was as others have suggested the everyday action that programmers take when in moving jobs they attempt to save themselves the trouble of reinventing the wheel.

Sergey Aleynikov Fan Club

http://www.facebook.com/group.php?gid=123550517320#/group.php?gid=123550...

Mon, 08/10/2009 - 14:28 | 31736 Anonymous
Anonymous's picture

That is exactly what I thought as well. Having working more than 15 years with code..

However, the press smells some stuff and just goes with it. And a lot of people that don't know the trade. The Reuters guy just keeps beating a dead horse, I guess it's his job. Too bad for him.

Mon, 08/10/2009 - 15:32 | 31877 dark pools of soros
dark pools of soros's picture

did Goldman sell the movie rights yet?  they need to keep making money 10 different ways on any event they create to keep up with their prior gains

Mon, 08/10/2009 - 16:58 | 32031 FerdeLance
FerdeLance's picture

I do similar research and have for a long time. The funny thing is that GS, like all the street, build their systems by essentially plegarising other's work. That's the nature of the field.  If Jon Doe Co. down the street wants in on research, they hire away the lieutenants.  Goldman's no different. In fact, I suspect that they have utilized some of my research to get certain trading data releases changed.  Do you still see weekly releases on the breakdown of short sales by members, public, and specialists?  Right, it disappeared right off the map.  Likely why? I wonder....Goldman's Speer Leads Kellog specialist acquisition  was the largest specialist and marketmaking operation by far in the world.  It's now called by another name.  They changed the game of stabilization, and lessened the specialist function.  The fellow who recently said "If rules are not convenient to their purpose (the big guys and exchanges), they have them changed".  That's one very astute cookie!

Mon, 08/10/2009 - 13:37 | 31638 Anonymous
Anonymous's picture

If Sergey actually developed the code or managed it...he had access to the source and he was trying to sell this code to a GS competitor. Is this bad for GS? Hell yes.

Ironically, I have a bunch of dopey friends trying to take long positions in GS this week...

Mon, 08/10/2009 - 13:37 | 31639 deadhead
deadhead's picture

if this was a civil matter, i'd say great move by Sergey.....problem is, it's a criminal case and the call of the US attorney on plea deals....that said, this move by sergey's attorney tells me that the plea deal wasn't going his way or they decided to push GS's buttons.   would be very curious to hear from some white collar crime attorneys out there.

disclosure: i'm not an atty and have limited knowledge on criminal law

Mon, 08/10/2009 - 13:40 | 31647 Anonymous
Anonymous's picture

This from Matt Goldstein's blog:

"UPDATE: Just got a copy of Goldman’s motion and it appears much of what Aleynikov wants are personnel records regarding ”performance reviews by peers and superiors, complaints, employee progress reports, training history records” etc."

He also notes that GS have hired a "high powered legal team".

http://blogs.reuters.com/commentaries/2009/08/10/sergey-strikes-back/

Mon, 08/10/2009 - 15:33 | 31884 dark pools of soros
dark pools of soros's picture

everyone  dust off their PACER accounts...   can we invest in PACER yet? 

Mon, 08/10/2009 - 14:47 | 31776 Anonymous
Anonymous's picture

I am very familiar with the Southern District of New York. This is a criminal case. The judge will bend over backwards to accomodate the defense requests. I have never seen a case where a defendant did not prevail in a discovery request. Goldman made a huge mistake in this matter. It won't be long before the AUSA starts issuing grand jury subpoenas on Goldman.

Mon, 08/10/2009 - 15:13 | 31838 Kaiser Soze
Kaiser Soze's picture

Absolutely correct. In order for the prosecution to prove this case, they are going to  be forced to give Sergey's attornies access to information at GS through the discovery process. I am not familiar with New York courts, but in my state the judge would allow wide discretion in what the defense could see to properly defend. The sad truth is that somewhere along the line the defense is going to run into GS sympathizers who are bought and paid for. They are smart in issuing the subpoena though, with the current distaste that many have for GS and their unreal profits, this is as good as it is gonna get for them as far as timing goes.

Mon, 08/10/2009 - 15:35 | 31886 dark pools of soros
dark pools of soros's picture

how soon before they just shoot him?

Mon, 08/10/2009 - 14:50 | 31782 Milton
Milton's picture

Do you think 85 Broad is a legit outfit?

Here's da message to employees: You wanna leava and go ta work for da boys in Chicago? Hey, ya betta think twice. Badda bing, badda boom. Look at Sergey. Handcuffs, jail, millions in legal fees. You wanna betray da Family? You gonna pay.

Mon, 08/10/2009 - 15:01 | 31805 Anonymous
Anonymous's picture

> You gonna pay

This sounds so right. They went too much public with this though, I don't think they're happy now.

Mon, 08/10/2009 - 17:59 | 32100 vf4 (not verified)
vf4's picture

"UPDATE: Just got a copy of Goldman’s motion and it appears much of what Aleynikov wants are personnel records regarding ”performance reviews by peers and superiors, complaints, employee progress reports, training history records” etc."

The Rich says"

recommended; my newest bookmarked finance website http://www...

Mon, 08/10/2009 - 18:29 | 32175 Raymond Shaw
Raymond Shaw's picture

Sergey Aleynikov Strikes Back, Files Goldman Subpoena - otherwise known as the check re-raise strategy in Texas Hold'em.

Mon, 08/10/2009 - 19:23 | 32247 Anonymous
Anonymous's picture

I have been programming for 30 years. During that time I worked for five different companys and my own business twice. I have copies of everything I wrote. The business changes so fast the only thing that lasts is ideas and I don't believe you can patent ideas, just embodyments. Twenty percent of the programmers do 80 percent of the work. There is a few that can program large systems alone. Those programmers have their code with them almost constantly. GS is just trying to prevent Sergi from working. It will turn out that people at GS have known that Sergi had a copy of the code he was working on and that he worked on it at home as well as at work and this has been true probably since he worked there.

Mon, 08/10/2009 - 19:41 | 32265 Raymond Shaw
Raymond Shaw's picture

Seconded.  Common working patterns of IT people.

Tue, 08/11/2009 - 01:27 | 32560 Anonymous
Anonymous's picture

If Sergey stole Goldie's secret sauce, why did profitable flash trades only sky rocket after he left?

Are Ali Baba's thieves hiding behind the pretty girl's petty coats?

Is the secret sauce a poison pill?

Tue, 08/11/2009 - 14:46 | 33096 Anonymous
Anonymous's picture

GETTTTTTTTTTTT EM, Sergey!!

America is behind you!! Take these ruthless bastards out.

Do NOT follow this link or you will be banned from the site!